Morgage Shuffling

Logjam

It looks like I shall be getting my redundancy notice this week, and my main worry is my mortgage is 45000 (exactly, it's interest only!)

I'm currently paying £89.12pm in interest, and slightly overpaying £120pm into my mortgage savings account.

My accounts look like this:

Mortgage balance £-45,000
Mortgage Savings £7,241
Current Account £1,306
Savings Account £2,2760

Should I move some of savings/mortgage savings and reduce the size of my mortgage/interest payments?

Any advice would be appreciated, i'm not looking forward to life on the dole...

poppy10_2

Logjam wrote: »

Should I move some of savings/mortgage savings and reduce the size of my mortgage/interest payments?

How much are you earning on your savings, and how much interest are you being charged on your mortgage?

rogerblack

Logjam wrote: »

Any advice would be appreciated, i'm not looking forward to life on the dole...

As I understand it, from a benefits point of view, you have around 11000 pounds of savings.

Do you have enough contributions that you will be getting contribution based JSA, and how sure are you you can get a job in 6 months?

The rules on capital are fairly simple.
You cannot generally repay any loans or debts unless not doing so would put you at the risk of excessive interest charges. Doing so risks you being seen as still having the money you repaid - 'notional capital', if a 'significant' reason for doing so was to obtain more benefit.

If you have any access to the 7K - this would include if you'd need to go to court to obtain it - it will be included in your capital.
11K will affect your JSA by 20 pounds, if I've got the numbers right, once you revert to income-based JSA after month 6.
(11K-6K/250).

http://www.dwp.gov.uk/docs/dmgch52.pdf for all the gory details.

You can however ask permission to do this, and if it's granted, you're fine.

Logjam

I've been in the same job from 2004, so I think I should get contribution based JSA. As for getting a new job in 6 months - i'm not too hopeful.

I don't receive any interest on my savings, they are all offset against the mortgage, which is apparantly equivalent to 4.71% AER. The morgage interest rate is 3.14 (2.64% above the bank of england base rate currently 0.5%)

robus

Logjam wrote: »

I've been in the same job from 2004, so I think I should get contribution based JSA. As for getting a new job in 6 months - i'm not too hopeful.

I don't receive any interest on my savings, they are all offset against the mortgage, which is apparantly equivalent to 4.71% AER. The morgage interest rate is 3.14 (2.64% above the bank of england base rate currently 0.5%)

The simple answer is - can you if you wish, have access to the mortgage savings of £7241?

Some schemes mean that the money is used as collateral for the mortgage, whilst others you can draw on the capital if you wish - effectively it is still your money to use as you wish.

Logjam

I can move all £11000 backwards and forwards freely. The more I think about this, i'm tempted to move £6000into the mortgage (reducing it to £39500) leaving me with savings of £5000.

karenx

If you can take the money to do what you want with it that means you have acess to it and if you move it to the mortgage you will be classed as still having the money in your savings

wazza

I am a bit confused here regarding mortgage overpayment.

I have an endowment mortgage which was taken out in 1990. The payments are made through direct debit. The building society sets the amount. I have been on JSA since March this year.

I know that JSA will only pay interest on mortgage for 2 years.

Talking to the mortgage provider it seems i have been paying more than i should be over the years and that there is an overpayment of around £2k.

I want to make more payments to reduce the mortgage. Thinking about paying £50-£100 per month if it is 'spare' cash.

Is the overpayment on the mortgage account classed as savings? I can't see why because i can't take that money out for personal use.

Emmzi

are you single or is there partner's income to consider?

how much redundancy pay are you expecting? good package or legal minimum?

rogerblack

wazza wrote: »

Talking to the mortgage provider it seems i have been paying more than i should be over the years and that there is an overpayment of around £2k.

I want to make more payments to reduce the mortgage. Thinking about paying £50-£100 per month if it is 'spare' cash.

Is the overpayment on the mortgage account classed as savings? I can't see why because i can't take that money out for personal use.

It's not, for that reason.
If the money cannot be withdrawn, it's not capital.
The money you pay in - if it came in a large lump of several K - may be treated as notional capital - capital that you are treated as still having, for calculation of benefits.
But, from a benefits POV, overpaying the mortgage, when your savings are not close to the limit, is fine.