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

zzzLazyDaisy

OP, I am so pleased to hear that this is just a hypothetical situation.

You can now go and make the necessary changes in your financial arrangements to protect yourself should you wish to rely on the state in the future.

hth (hope this helps)

Daisy

VictimOfImpersonation

So can we take it that you are offering informed comment on the way that DWP actually do treat offset mortgages in 2011, Daisy? And that they do treat the Virgin One account and the Nationwide Flexible mortgage differently? Are there any others that benefit from preferential treatment?

I believe that DWP mortgage interest protection cuts in a bit earlier than 9 months now?

Could you also comment on the example of having just spent a large sum on uni fees out of say a Virgin One Account whether DWP would disbar interest on that proportion of the loan, or on the whole loan or whether they would be interested at all in assessing that amount as deprivation of capital?

I started this thread not for any particular personal reasons but to publicly highlight what I expect remains an anomaly as observed by me personally.

This thread may indeed be a Public Health Warning to those contemplatng an Offset Mortgage unless someone quickly states there is no danger.

HappyMJ wrote:

... 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.

Or in my currently 100% offset position I could just apply for a standard mortgage for £zero perhaps ! Seriously, I have learned that the best protection anyone can have from unemployment is to avail themselves with substantial low rate credit lines that they can use on a rainy day without speaking to anyone. I have that already. Why do I have to change my very prudent financial arrangements to suit DWPs deviousness in declining claims? Suggesting I have an option to get the best out of DWP by getting a Virgin one account is a bit like saying I have the option of getting the best FlyBe prices if I get myself a VISA Electron!

I don't think we are going to get any different answers now so I have changed the title of the thread to reflect the Public Health Warning that needs to go with Offset Mortgages. It is as important to broadcast it as any warning about a Mortgage PPI that doesn't work.

hth

silvercar

Totally agree with victimofimpersonation. The unfairness is that different offsets will be treated differently just because the lender dresses them up as a CAM (current account mortgage) or an offset savings mortgage. The actual product is the same. They key benefit is that the money is there for you to use as and when you wish with no qualification required.

daisy wrote:

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.

This advice totally destroys the benefit of the offset. Namely that in difficult times you can draw on the savings pot as and when you choose. If you used your total savings pot to reduce your mortgage then in times of financial pressure or unemployment you could find yourself struggling to survive on benefits.

When we remortgaged on moving home we were advised to take as much as the lender would give us and put whatever we didn't need straight into the offset pot; so knowing from day 1 we had access to a serious amount of money should we ever need it.

Sixer

I agree it's an anomaly.

BUT...

We were without benefits mortgage support for some time. When it was re-introduced, it was much less beneficial than previously. It's aimed solely at preventing repossessions, not at covering someone's mortgage during a - shortish and temporary - period of unemployment simply because they have a mortgage.

I imagine the powers that be would argue that many people with offset or one account mortgages and thus a line of credit aren't as vulnerable to repossession, so the need for a benefit to cover it is less pressing.

This isn't to say that this is my opinion, but I think you may have an erroneous idea about the purpose of the support for mortgage interest benefit.

silvercar

The purpose of the SMI was to provide some equality between those renting (and getting their rent paid as housing benefit) and those who had bought, who were left in a much worse situation.

That it was introduced at a time when house prices had crashed, therefore removing the option of selling (due to negative equity) for a lot of people, meant that a lifeline was needed.

diolch

Quite honestly I can't work out what the OP is posting this question for. It now turns out that it is a hypothetical scenario! Maybe he is trying to find a way that will give him the option of claiming SMI if his job goes. Or is he trying to find a way of defeating the DWP by 'getting rid' of the built up savings. I don't know, but then he intimates that he might now change finance providers. He says both of his cars have or are to be snatched by the HP company.
I have a feeling that he is trying his level best to arrange his financial affairs so that he doesn't lose his capital savings and the poor old taxpayer gets lumbered with paying for his mortgage and supporting him as his job looks iffy. Even if he does change things round (with his financial problems), the DWP, if he makes a claim in the future, will see through his manoeuvres and treat the capital he has now as being self deprived.

HappyMJ

The DWP will never pay for the mortgage interest (in this case) no matter which way it was done in the first place as the lowest balance ever was zero. The DWP only pay the interest on CAM's on the lowest balance it's ever been. You can't have it both ways.... Having a zero balance CAM will only allow income based benefits to be paid such as JSA even though the whole mortgage balance could theoretically be withdrawn.

zagfles

silvercar wrote: »

This advice totally destroys the benefit of the offset. Namely that in difficult times you can draw on the savings pot as and when you choose. If you used your total savings pot to reduce your mortgage then in times of financial pressure or unemployment you could find yourself struggling to survive on benefits.

No it doesn't. A flexible mortgage is one where you can make overpayments and then borrow back the overpayments whenever you want. It's effectively the same as an offset except you don't have two accounts, just the one. Same with the "one-account" which is basically a current account with a huge overdraft secured on your house.

VictimOfImpersonation

diolch wrote: »

He says both of his cars have or are to be snatched by the HP company.

What the devil are you on about you strange person ? Whatever gave you the idea that I have ever had cars on HP ??? I recommend you might lay off the weed, man :easter_ba and get your beans in a row ...

Only someone with your "buy now/pay later for tomorrow we may die" ideas gets into such a situation, diolch. The last thing I had on HP was a portable cassette recorder which was as big as an Oxford dictionary and had a mono mic on a string from a catalogue agent when I was 14. I learned my lesson not to use HP again before I became 15.


I truly do hope you detractors in the argument do not have any official function within DWP - as individuals you are of course entitled to your views but some of the sentiments and knowledge expressed are truly lamentable.

DX2

Can I just advise you not to take any advice from our resident Troll diolch that's his latest username, you might be intrested in his previous username especially this thread:
https://forums.moneysavingexpert.com/discussion/2787984

VictimOfImpersonation wrote: »

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??