I need to know my rights for means tested benifits

ilovemyhouse

Hi can anyone help us understant the rules around this.
we morgaged our home to buy a house for my son and partner and became unemployed but have been refused any means tested benifits because the house my son is in is classed as capital, but even if sold would not cover the morgage that we took out to buy it. and we had no mogage on our house before the house was bought that my son lives in:(

can anyone help please

DannyboyMidlands

Who owns the house that your son lives in?

When did you buy it?

When did you both become unemployed? Both?

Dunroamin

Isn't there another thread on this?

TadleyBaggie

Yep: https://forums.moneysavingexpert.com/discussion/4066889

grummps

ilovemyhouse wrote: »

Hi can anyone help us understant the rules around this.
we morgaged our home to buy a house for my son and partner and became unemployed but have been refused any means tested benifits because the house my son is in is classed as capital, but even if sold would not cover the morgage that we took out to buy it. and we had no mogage on our house before the house was bought that my son lives in:(

can anyone help please

There are two aspects to this case.

One as you have quite rightly identified, you own a property that does not have a mortgage on it hence it is treated as capital less 10%.

Secondly you would get no help with the mortgage you have on your own home as it wasn't used to buy the home you live in.

This is very much like owning a house in the country for weekends away raising the money to buy it via a mortgage on your already existing mortgage free home.
You cannot use your mortgage to offset the cash that is tied up in another property?

Put simply, you have released the equity in your home. Once you do that it is treated as capital.

What you seem to want is either for the DWP to ignore that you have £1,000's tied up in a second property that you could easily sell and live off, or hopefully ignore the property and get help for the mortgage you now have. Surely you don't expect to have the state pay you benefits whilst having a substantial estate?

It was your choice to cash in on the equity, the consequences from which mean you have savings above the limit - £16,000.

You will never get away from the problem of deprivation either. You cannot just put someone else's name to an asset and expect the DWP to ignore it.

Quite honestly you will have to get your son to mortgage it and give you the cash back, then you can live off it. Mind you there lies another problem. If he was ever to want help via the state for that mortgage it all depends on how he currently stands regarding ownership. If his name is on the deeds and you just made a gift of the money, then by him mortgaging later, that mortgage was also not used to buy it - he already owned it!

It has turned out to be a very very expensive and generous gift for all concerned!!!!! Why on earth didn't you work through the various scenarios and consider the many 'what if's' using DWP law and regulations first?

xylophone

If the house is no longer "in a state", presumably your son can now obtain a mortgage and buy the house from you?

real1314

ilovemyhouse wrote: »

Hi can anyone help us understant the rules around this.
we morgaged our home to buy a house for my son and partner and became unemployed but have been refused any means tested benifits because the house my son is in is classed as capital, but even if sold would not cover the morgage that we took out to buy it. and we had no mogage on our house before the house was bought that my son lives in:(

can anyone help please

If selling the house your son is in would not pay off the mortgage, was the price paid less than the amount you took as a mortgage?

:cool:

BigAunty

Here is the DWP technical guidance, the actual rules on how means tested benefits like housing benefit/council tax discount operate, when a claimant owns a house but does not occupy it. There's a couple of sectioins which include how the property is valued, how the capital is worked out and so forth.

I expect the same rules apply to other means tested benefits.

http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/rr2-a-guide-to-housing-benefit/working-it-out/income-and-capital/

I think sometimes capital is ignored for 6 months if the property is up for sale - see the section on exemptions.

What benefits have you been denied?

ilovemyhouse

hi thanks for the replies everyone,
just got the house this april as it came on the market and son could not get a morgage for it we thought this would work not knowing what would happen.
the amount borrowed was 15% more than the purchase price to fix it up so even if my son wanted to try again for a morgage they would not give him the amount needed to cover the balance. also my partner had to reduce there hours to help care for me due to illness so was only working full time for a few months before he was layed off and i didn't check out guidlines for benifit beacause i never thought i would be in this position. i think there must be more people this has happend to

Firefox1975

ilovemyhouse wrote: »

hi thanks for the replies everyone,
just got the house this april as it came on the market and son could not get a morgage for it we thought this would work not knowing what would happen.

And Therein lies the problem

the amount borrowed was 15% more than the purchase price to fix it up so even if my son wanted to try again for a morgage they would not give him the amount needed to cover the balance.

Who is currently paying the mortgage? you or your son?

also my partner had to reduce there hours to help care for me due to illness so was only working full time for a few months before he was layed off and i didn't check out guidlines for benifit beacause i never thought i would be in this position. i think there must be more people this has happend to

Your solutions :-

sell the house your son is in - remortgage your existing property to pay the shortfall. your son comes back to live with you and pays his "rent" to cover the "new" mortgage payments.

princessdon

What capital do you have in your son's home?

Ie the market value - mortgage less 10%

What capital do you have in your home?

Ie the market value - mortgage less 10%


If you have capital in both then basically you will have to find a way for your son to take over the mortgage or sell his home or live off your savings.