WARNING: Offset Mortgage? DWP discriminate & deny means tested benefits if used.

diolch

VictimOfImpersonation wrote: »

Interesting observation.

But who is to say it proves anything at all? You can make few long term assumptions about any financial product in Great Britain. We are encouraged constantly to shop around. If you have a tracker at the moment you are encouraged to try to fix it (new product). If you have an offset tracker interest only with offset ISAs currently you might easily in two months time have swapped it for no ISAs and a Capital & Repayment with the same or a different provider on the net balance.

If your observation is correct it is evidence of an uninformed and very limited false assumption of how house purchase finance works here.

All of that is immaterial to the question you asked.

What you could have done, what others have done or can do has nothing to do with the predicament you find yourself in now.

You have what you have, you can't change it, you can't start viewing it from a different perspective. When you decided to embark on this type of mortgage, you would or should have considered the impact of 'what if' could have on the scheme.
To me it looks like you didn't take enough time out to examine all of the possible implications including unemployment, sickness and benefit claiming. That is your fault not the fault of the DWP who see the scheme as it is for what it is.

VictimOfImpersonation

Sounds like your sis-in-law has her head well screwed on, diolch :money:

And that she might not ever be out of work long enough to worry too much, but if she did suddenly lose her job and couldn't find another, and discounting any other income earner in the household, would you say she would be entitled to start claiming 3.63% on £365,000 at some point as Housing Costs benefit ?

Ouch just saw your next post

You have what you have, you can't change it, you can't start viewing it from a different perspective. When you decided to embark on this type of mortgage, you would or should have considered the impact of 'what if' could have on the scheme.
To me it looks like you didn't take enough time out to examine all of the possible implications including unemployment, sickness and benefit claiming. That is your fault not the fault of the DWP who see the scheme as it is for what it is.

So a Health Warning on Offset Mortgages is indeed required?

I for one cannot see them accepting that you have £50,000 sat in an account for which you can withdraw on. It is different if you have to borrow it from say the bank - like a loan. But in your case, it is your money, no matter what you intended it for.

Ah that's a misconception pure and simple. It is not my money. You may have noticed that all credit agreements including mortgages are potentially repayable in full especially if the lender thinks the agreement is in jeopardy (if they find out you have lost your job). In my example they could demand repayment of £100,000 and cancel the mortgage arrangement leaving me with what? Not £50,000 of capital but £50,000 of potentially unserviceable debt :eek:

I chose the numbers in my example to make comparisons easy but maybe I've confused you by doing so

In your sis-in-laws case if her lender became aware of her having lost her job with little hope of replacing it with one that could service a £365,000 facility, they could also demand immediate payment of the outstanding balance of £300,000+ I think you said - the effects would be much the same - your sis-in-law may not have that kind of money on tap anymore than the punter in my example.

Whether mortgage lenders will start trying such tactics is debateable, but who knows?

But more importantly, who knows the answer to my original question please ? How are offset mortgages actually dealt with in assessing benefits entitlement ?

diolch

VictimOfImpersonation wrote: »

Sounds like your sis-in-law has her head well screwed on, diolch :money:

And that she might not ever be out of work long enough to worry too much, but if she did suddenly lose her job and couldn't find another, and discounting any other income earner in the household, would you say she would be entitled to start claiming 3.63% on £365,000 at some point as Housing Costs benefit ?

Ouch just saw your next postSo a Health Warning on Offset Mortgages is indeed required?

Ah that's a misconception pure and simple. It is not my money. You may have noticed that all credit agreements including mortgages are potentially repayable in full especially if the lender thinks the agreement is in jeopardy (if they find out you have lost your job). In my example they could demand repayment of £100,000 and cancel the mortgage arrangement leaving me with what? Not £50,000 of capital but £50,000 of potentially unserviceable debt :eek:

I chose the numbers in my example to make comparisons easy but maybe I've confused you by doing so

In your sis-in-laws case if her lender became aware of her having lost her job with little hope of replacing it with one that could service a £365,000 facility, they could also demand immediate payment of the outstanding balance of £300,000+ I think you said - the effects would be much the same - your sis-in-law may not have that kind of money on tap anymore than the punter in my example.

Whether mortgage lenders will start trying such tactics is debateable, but who knows?

But more importantly, who knows the answer to my original question please ? How are offset mortgages actually dealt with in assessing benefits entitlement ?

This is now going way off topic, so I will not bother to answer again as you seem to have more of a beef about the sytem and others that appear to do better out of it than you are.

But I will quickly answer the personal matters.
She is fully aware of her liabilities and responsibilities. It is very unlikely that she will ever be without employment and income as these are guaranteed by virtue of her talents.
For your information she is employed by the EEC as an advisor to the assembly on matters of medical science involving Third World countries. Her contract guarantees her position (and her fees) for another 10 years at least. She will then have the option of retiring. She is also a Scientific Director with the World Health Organisation responsible for scientific research into major health problems in Third World countries, and in particular the African Nations.

I doubt she will not be able to muster the settlement money for the mortgage when the time comes.

All this from a girl who left school without any qualifications and was more interested in being with her boyfriend musician (my brother) and all night parties! She didn't think about education until she was in her 20's after she had her children and had time on her hands whilst my bro was touring Europe and beyond. Now he stays at home enjoying his music whilst she works to put food on the table.

VictimOfImpersonation

This is now going way off topic, so I will not bother to answer again as you seem to have more of a beef about the sytem and others that appear to do better out of it than you are.

I don't quite understand why you introduced your sister-in-law's rather unusual real-life example into the argument. I have no beef with winners but I have a beef with things like fraud, ruthlessness and corruption. You can see from my username that I might hold such views.

Unless someone who knows the answer to my original question can enlighten us I shall conclude that yes indeed the system is still wrong with regard to fairness within our welfare system to many of those who deserve better support.

Moreover, I was surprised to read so much additional detail of your sister-in-law's contracts. Although you are no doubt very proud of her I think perhaps you may do her a disservice by publishing her personal data on the internet in a way that might identify her exactly unless you have been clever enough to muddy it.

If your posts are edited or deleted by the morning I shall not be surprised :rotfl:


Anyway, an answer to the original question, anyone??

zagfles

VictimOfImpersonation wrote: »

I understand, but if your suggestion works (do you know if it works?)

Well I can't see on what basis it wouldn't.

then that might mean that offset mortgages should come with a Health Warning - if you lose your job then you are on your own ?

Why? Offset savings accounts are marketed as an alternative to ordinary savings accounts with the tax/interest advantages, not benefits advantages. An ordinary savings product wouldn't come with such a "health warning" so why should an offset?

I cannot believe that the Benefits Agency can pick and choose what they want to call a normal house purchase debt and a flexible one ? Surely they are more up with the times now ?

With an associated "savings account" in an offset arrangement you can derive no income benefit from the "savings" balance - you are simply reducing your mortgage balance on a daily basis. It is pure semantics if the Benefits Agency discriminate against an offset arrangement in favour of a "one account", surely ?

An "offset" account is a separate account with a separate balance, the only difference between that and a normal savings account is that you forsake the interest on the balance in return for lower interest on your mortgage.

A "one account" or a flexible mortgage is simply a debt.

VictimOfImpersonation

As I said, it is semantics or wordplay to assert that a Virgin One Account or a Nationwide flexible mortgage or an offset arrangement with a third bank are any different when it comes to the overall liability to pay it back and ability to vary the amount borrowed on a daily basis at any time . It is plainly wrong to argue that only one includes segregated capital that is in some way more usable than in the other two. And to say an offset mortgage arrangement is actually marketed as a savings account first and foremost is somewhat mischievous. It is in no way fair for the DWP to do this if that is what is still happening. In their case it would be devious if that is the argument they have rehearsed and are practising.

The ability for an offset customer to write a cheque to increase the overall debt back up to the original mortgage debt at any time during the period of the mortgage is absolutely no different to that of a 'Virgin one account' customer or of a Nationwide flexible mortgage customer. I too get ONE statement in relation to my home loan offset arrangement every month.

Offset interest is calculated in exactly the same way on a daily basis as either of the other two. The only way any of us (with Virgin One, Nationwide Flex or "Offset" with a third bank) can cancel the arrangement is to cancel the whole thing and pay back the entire capital originally borrowed. We won't get our deeds back until we do.

It is not as if most people have a choice of the three arrangements when they take out a home loan. As diolch said "You have what you have. You can't change it." That far he/she is correct.

But unlike his sister-in-law, most people find they have few choices of home loan provider and when they get the offer it is like breasting the tape in a race. It is useless and somewhat fatuous to be told down the line when things get tough "actually it seems you were in the wrong race, sorry but we don't recognise it, and actually you clearly have more capital than someone in the right race - never mind that it is capital borrowed for house purchase purposes - so run along".

Does anyone at DWP challenge a job-seeking parent who recently shelled out £70,000 on their Nationwide flexible mortgage for university fees and say "actually you have deprived yourself of a lower debt balance - your loan is not for house purchase purposes"? No perhaps not, because that would be fatuous, mischievous, devious and unfair, wouldn't it ?

dmg24

Is your question relating to an actual situation, or is it hypothetical?

zzzLazyDaisy

VictimOfImpersonation wrote: »

Edit: I added 3. because basically that was how I was made to feel !

I am surmising from this comment that you have already made enquiries of the appropriate department, didn't like the response and have come here hoping that someone will give you a different answer?

In the end, whether you agree with it or not - and I accept that you don't - a flexible mortgage that allows you to reduce or increase your borrowings (such as the One Account) is treated differently from an offset mortgage, where you have two accounts - a mortgage and a savings account - and offset the interest on the respective accounts against each other.

It is a bit late to do much about this if you are already in a position of wanting to claim means tested benefits, but once you are back in work, you might want to consider paying off a chunk of your mortgage with the money in your offset savings account, and changing to a flexible mortgage thus avoiding this situation occurring again in the future.

hth

Daisy

VictimOfImpersonation

Purely hypothetical for 2011. My own offset is currently 100% offset, but interestingly the biggest likely call on it again in the next few years will be 2 x £9000 a year plus accommodation/living expenses for you know what !

My interest arose out of playing with the new Benefits Calculator Tool and my unemployed experience some years ago of being told that even if I was jobless for over 9 months I would not get any mortgage interest help because I had offset savings. I was discouraged from bothering to claim at that point and it turned out not to be a practical issue when I found a new role. However like most people, I do not feel my employemnt is particularly secure and it certainly is the most challenging period of my working life right now just to survive.

So I am wondering how I should stand if after my two children have been through uni, or worse than that just part of it (when I am back in the same part-offset situation) and if I should become unemployed again.

It is not a nice feeling to think I thought I had it under control and that the DWP would be up with the times by now, but now it seems I really will need to change providers just to make sure I qualify for DWP protection.

Daisy wrote:

...an offset mortgage, where you have two accounts - a mortgage and a savings account - and offset the interest on the respective accounts against each other.

... that's another major misconception and from a retired solicitor ! There is no offset interest, merely reduced interest on the balance between the total mortgaged debt and the borrowed capital not drawn down on a daily basis. I hope you don't consult advising DMs at the DWP in your spare time!

hth

htwhat??

HappyMJ

VictimOfImpersonation wrote: »

Purely hypothetical for 2011. My own offset is currently 100% offset, but interestingly the biggest likely call on it again in the next few years will be 2 x £9000 a year plus accommodation/living expenses for you know what !

My interest arose out of playing with the new Benefits Calculator Tool and my unemployed experience some years ago of being told that even if I was jobless for over 9 months I would not get any mortgage interest help because I had offset savings. I was discouraged from bothering to claim at that point and it turned out not to be a practical issue when I found a new role. However like most people, I do not feel my employemnt is particularly secure and it certainly is the most challenging period of my working life right now just to survive.

So I am wondering how I should stand if after my two children have been through uni, or worse than that just part of it (when I am back in the same part-offset situation) and if I should become unemployed again.

It is not a nice feeling to think I thought I had it under control and that the DWP would be up with the times by now, but now it seems I really will need to change providers just to make sure I qualify for DWP protection.

htwhat??

hth=Hope to help...

If it's hypothetical because your job is insecure why don't you just apply for a "one account" whilst you still have a job. Then you won't have the money as cash offset against a mortgage.