Re-mortgage while on benefits

P1ckle

Evening all,

I have been on incapacity and DLA since 2006 due to a long term illness. The debts are beginning to spiral out of control and I have a very small mortgage which is a lot smaller than my actual property is worth.

I do receive help with paying the interest on my mortgage but make up the rest myself.

Has anyone ever heard of someone managing to remortgage to clear there feet while on benefits?

Thank you for your time,

Pick

somethingcorporate

Have you considered selling up and downsizing to release enough equity to clear the debts? This would leave you both mortgage and debt free.

AskMeAnother

I think from memory there are a couple of lenders who will help in this situation as it's DLA rather than unemployment income.

Try speaking to your existing lender and see if they can help. You would also need to check to make sure you would continue to receive full help with interest payments if you increase your mortgage.

As the lost poster said, down-sizing is also a very sensible option if it's possible for you.

JimmyTheWig

The mortgage company should take all income that you can prove into account. Santander certainly took our child benefit (once backed up with evidence faxed) into account in terms of affordability.

But I believe lenders are not too happy to increase mortgage borrowing to pay off other debts. I would certainly think that they would judge affordability as if you spent the extra money they gave you rather than used it to pay off the debts. In which case you would have to show that you could afford the new mortgage and the current debts each month, as well as having enough money to live on each month (using their figures, not those from the OS board here!!).

ETA: I also agree with the downsizing plan. Particularly if, for example, a bungalow would be more appropriate as the years go on with your incapacity.

Conrad

P1ckle wrote: »

Evening all,

I have been on incapacity and DLA since 2006 due to a long term illness. The debts are beginning to spiral out of control and I have a very small mortgage which is a lot smaller than my actual property is worth.

I do receive help with paying the interest on my mortgage but make up the rest myself.

Has anyone ever heard of someone managing to remortgage to clear there feet while on benefits?

Thank you for your time,

Pick

I'm guessing your credit files will reveal stress in the form of late payments, in which case a standard remortgage is out of the question, however you could consider a secured loan whereby you for example borrow £10,000, and make no repayments, but you agree to repaying a given sum when you finally sell the homw one day.

Not many brokers will know about this scheme and you will get nowhere with second charge secured loans from the usual lenders such as Nemo or Blemain as they will state a normal pay back loan does not pass the affordability tests.

If you get stuck I can give you the details.

Beware - if you borrowed £10k now, although there are no monthly payments during the term agreed, you would for example pay back £20,000 in total when the home is sold and if the loan term is exceeded, an additional amount of interest each day.

All the best

AskMeAnother

JimmyTheWig wrote: »

The mortgage company should take all income that you can prove into account. Santander certainly took our child benefit (once backed up with evidence faxed) into account in terms of affordability.

This is true if you also have earned income from employment or self employment. If you income is derivbed solely from benefits then it is a little more niche area.

As long as your credit file is ok you should be able to do it though as the remortgage can be for "any leagal" purpose with most lenders. So debt consolidation is fine as long as you meet the affordabliity criteria.

handytips

I think the answer to the op's question is NO you will not be able to remortgage. Sorry

AskMeAnother

handytips wrote: »

I think the answer to the op's question is NO you will not be able to remortgage. Sorry

Sorry, but I disagree. If the debt situation is still in control there are lenders who will take this on. The OP said "The debts are beginning to spiral out of control " and it largely depends on what exactly this means.

handytips

I'll have a pint with you on it

AskMeAnother

done, though not sure how we settle it

handytips

even if they were allowed to remo they would lose their subsidy, therefore a remo in this case isnt feasable on affordability, Blemain used to do these if the LTV was low enough, had a similar case to this about 2 years ago and nobody would go near it. There are other options available to the OP but non of them are mortgaging i fear.