Support for Mortgage Interest

HAMISH_MCTAVISH

the_flying_pig wrote: »

Unless claimants are mostly living in garden sheds that implies most have very significant equity which they can & should be burning through before claiming benefits..

I suppose that really depends on whether you believe in the concept of a social safety net or not, and more importantly, whether you think that safety net should discriminate against those who own houses rather than rent them.

Rightly or wrongly, most people think taxation in this country is too high, but grudgingly accept it because they also believe the safety net will exist for them in the event of tough times.

We all pay tax and national insurance and in return are supposed to have a safety net available to us in the event of illness, redundancy, etc. I see no reason why homeowners should be discriminated against in that regard by comparison to renters.

HAMISH_MCTAVISH

HappyMJ wrote: »

They would have £60,000 of cash yes. They would not get HB straight away but they would have to pay the rent. Once the money runs out getting below £16,000 which would only take about 5 years or so they would then claim HB costing much more than SMI )

But I think the more relevant point is that they would almost certainly never be able to own a house again.

And the proceeds from the sale would end up being spent within a few years.

So then the state would end up paying for their housing for several decades in their old age.

Emy1501

Homeowners who are are unable to pay their mortgage after 12 months through other circumstances other than disability etc should be forced to sell their house if they cannot pay the mortgage and use the equity to live off.

having a scheme where people can simply take out a big mortgage and then live off the state close to retirement age when they lose their job is wrong.

The idea of SMI was to help people who lost their job and needed help whilst they found another one. Where is the incentive for people to support themselves if they can simply rely on the government to support them.

Generali

HAMISH_MCTAVISH wrote: »

But I think the more relevant point is that they would almost certainly never be able to own a house again.

That assumes they would never work again.

If you get to continue living in your home etc then why bother busting your balls to get a new job that you don't really like?

!!!!!!, a mortgage of £30 a week could easily be paid by cleaning houses or mowing lawns. It's less than 6 hours a week on the minimum wage!

HappyMJ

Emy1501 wrote: »

Homeowners who are are unable to pay their mortgage after 12 months through other circumstances other than disability etc should be forced to sell their house if they cannot pay the mortgage and use the equity to live off.

having a scheme where people can simply take out a big mortgage and then live off the state close to retirement age when they lose their job is wrong.

The idea of SMI was to help people who lost their job and needed help whilst they found another one. Where is the incentive for people to support themselves if they can simply rely on the government to support them.

It is highly unlikely a mortgage provider will grant a "big" mortgage to some who is close to retirement age. Most mortgage providers want some proof that the mortgage will be repaid by the time they retire. The average payment to someone who is retired is only £20 a week. This may be due to an endowment policy not being high enough to pay the mortgage on maturity so there is a small amount left to repay. There are many factors to think about. They could have been a couple where one partner has left the home and the partner who stayed had to buy them out. Do we really want to kick them out and force them to rent in insecure acomodation at that age? Or should they be housed in secure council housing at our cost being partially subsidized? People have to live somewhere and the cheapest way is to pay £20 a week in SMI and let them stay where they are.

HappyMJ

Generali wrote: »

That assumes they would never work again.

If you get to continue living in your home etc then why bother busting your balls to get a new job that you don't really like?

!!!!!!, a mortgage of £30 a week could easily be paid by cleaning houses or mowing lawns. It's less than 6 hours a week on the minimum wage!

Working and earning money would reduce income support, JSA or pension credit. The person working would have to work much more than 6 hours to recover the cost of the JSA and the SMI payment and any other benefits such as council tax benefit. If I could keep my benefits I could just earn an extra £30 a week to cover my expenses but earning an extra £30 a week means I lose £29 in other benefits so it's not worth it.

HAMISH_MCTAVISH

Emy1501 wrote: »

Where is the incentive for people to support themselves if they can simply rely on the government to support them.

Yes, I see the validity of that argument, but the same thing applies in reverse too.....

Where's the incentive for people to do the right thing and buy a house, thus planning for their housing needs in old age, if you'll lose it at the drop of a hat in the event you're made redundant or get ill?

As it stands, the government can either choose to pay very small amounts of SMI, or very large amounts of housing benefit to support people through their retirement after they inevitably spend down their lump sum and start claiming benefits.

ILW

Is SMI paid on anything above the interest based on the original purchase price of the house?

Or in some cases is the state actually paying for holidays and cars that were bought some time ago?

Emy1501

HappyMJ wrote: »

It is highly unlikely a mortgage provider will grant a "big" mortgage to some who is close to retirement age. Most mortgage providers want some proof that the mortgage will be repaid by the time they retire. The average payment to someone who is retired is only £20 a week. This may be due to an endowment policy not being high enough to pay the mortgage on maturity so there is a small amount left to repay. There are many factors to think about. They could have been a couple where one partner has left the home and the partner who stayed had to buy them out. Do we really want to kick them out and force them to rent in insecure acomodation at that age? Or should they be housed in secure council housing at our cost being partially subsidized? People have to live somewhere and the cheapest way is to pay £20 a week in SMI and let them stay where they are.

Why cant they downsize? We are living in tough times where cuts are being made evrywhere. As said why cant these people take out part time jobs or pay off these costs through their pensions etc.

People need to be accountable for their own problems rather than simply relying on the state. People who took out Endowments took on a gamble and they should not be relying on everyone to pay for their failed gamble.

wotsthat

HAMISH_MCTAVISH wrote: »

The government should be in the business of fulfilling it's responsibilities in the most cost effective way possible.

Where SMI is cheaper for the government than rent support, or emergency accomodation, or a council house, then they should pay SMI.

Politically nothing will be done as the government don't want to be seen as throwing predominantly older people out of their houses so the status quo will be maintained. Fortunately, the sums involved are tiny and the alternatives, given the recipient age profile are more expensive, than taking away SMI from old people.

That said, the government shouldn't be favouring property owners over renters. Yes in the short term it makes no sense to turf people out as that's going to be expensive and difficult for the owners to recover from.

Longer term SMI, even if it's cheaper than providing rent, is a bias towards failed owners. If you've bought a house, had 18 months or so of SMI, and you've not used that time then it's time to withdraw support.