Pension Credit and Mortgage Interest payments

morgaine65

My State Pension is topped up with Pension Credit. The total amount of £137.25 per week is said by the government to be 'the minimum amount needed to live on'! However, as my mortgage interest rate (interest-only mortgage) is 6.2% and the new government legislation has averaged out the interest rate they will pay at just over 3%, I'm now having to pay £17.50 out of this 'minimum amount to live on' to make up up the shortfall! I've tried to move my mortgage to a lower interest rate but have been refused several times as I'm now retired. This is a total contradiction - in fact, the government are actually breaking their own law by putting me in this situation. Can I do anything? Any suggestions welcome.

[Deleted User]

firstly i suppose they might expect your mortgage to be paid off by the time you retired,however many claimants have been put in this situation since october many having to find far more than £17.50 a week
have you considered selling up and down sizing?or have you considered asking your current lender if they can offer you a lower rate,many can in fact many have in such cases

morgaine65

Hi John - thanks for the prompt reply! Yes, I have thought of down-sizing, however my flat is freehold and consequently isn't that easy to sell as lenders in England don't often give mortgages unless there's a leasehold in place - I only got mine as it was Standard Life (Scottish), it was at the peak of easy to get mortgages and I had 75% of asking price as a deposit. I've already asked for a lower interest rate from Barclays (Standard Life mortgages are all with Barclays now, although I still deal with SL - don't know why!), but they won't do it. Have tried other lenders as I said - all big NO's.

Have you any views on my comment re-the government breaking their own law ie. 'minimum amount needed to live on'? I'm also very aware that many other people have a lot more to find to cover the shortfall of their interest payments and I'm very sympathetic. However, £70 a month is a lot of money to be without for me personally, and if there is a way to tackle this issue, it will also benefit others, wouldn't you agree? Thanks again.

[Deleted User]

I would agree,but tbh this problem is not a new one,whats made a difference is that the last govt pegged mortgage help at 6.2% whilst many borrowers were paying considerably less,then last october the new govt brought in the current calculation which is the advertised bank of england average mortgage rate.I`ve had smi for 13 years and have always had to pay towards my mortgage(well over £100 a month)until last month when we sold up and down sized.
Its also worth noting that many people on benefits who get help with rents are now being in some cases forced to pay more towards their rent.
i`m sure some would argue that the amount the govt says you need to live on could include an element of housing cost,e.g they all have to pay water rates in england and wales(scotland?)
as a new mse member it might be worth looking round at some of the boards dedicated to moneysaving?

morgaine65

Thanks for the feedback John - gosh, your interest rate must have been exhorbitant! I would still like to know from govt exactly what they mean by 'minimun amount to live on' - which is why I'm going to see my MP in a couple of weeks. I assume it's all written down somewhere in their archives! I'll post any progress if or when this happens. As regards moneysaving, have been doing that for many years, even when I was self-employed, but will take your advice and look for further ways to cut back on expenditure.

Whiteknight

I would suggest you look at all of your expenditure and try to make savings elsewhere to cover the costs of your mortgage.

bunny999

morgaine65 wrote: »

My State Pension is topped up with Pension Credit. The total amount of £137.25 per week is said by the government to be 'the minimum amount needed to live on'! However, as my mortgage interest rate (interest-only mortgage) is 6.2% and the new government legislation has averaged out the interest rate they will pay at just over 3%, I'm now having to pay £17.50 out of this 'minimum amount to live on' to make up up the shortfall! I've tried to move my mortgage to a lower interest rate but have been refused several times as I'm now retired. This is a total contradiction - in fact, the government are actually breaking their own law by putting me in this situation. Can I do anything? Any suggestions welcome.

You are getting far more than people on other benefits eg JSA for the over 25s is £67.50 and about £50 for the under 25s. So it is hardly going to be illegal for you to have to live on twice the amount that lots of other people have to live on.

STOCKWIRE

bunny999 wrote: »

You are getting far more than people on other benefits eg JSA for the over 25s is £67.50 and about £50 for the under 25s. So it is hardly going to be illegal for you to have to live on twice the amount that lots of other people have to live on.

That's to encourage them to go out and find employment. Slightly different for someone retired having worked all their life. They have paid into the system and deserve a comfortable retirement.

poppasmurf_bewdley

A pensioner friend of mine is also on Pension Credit, and he already has to find about £20 per week out of his £137 per week towards his rent. And when the new HB regulations come into effect for him, he'll have to find another £7 a week. So as this government is in the process of screwing pensioners into the ground, I don't think you'll get any help for your shortfall.
Sorry about that, but if you're not rich, this Government doesn't want to know you.

dmg24

STOCKWIRE wrote: »

That's to encourage them to go out and find employment. Slightly different for someone retired having worked all their life. They have paid into the system and deserve a comfortable retirement.

They have also had far more time to organise their financial affairs - retirement is far more predictable than losing your job!

STOCKWIRE

dmg24 wrote: »

They have also had far more time to organise their financial affairs - retirement is far more predictable than losing your job!

"Easy" to plan if you are fortunate to get a public service pension. Any other scheme on offer was like choosing the lottery.