Redundancy-should I pay my mortgage off

chrissiewants2save

My Husband is about to be made redundant. We can just about manage on my wage if we don't need to pay the mortgage. Because of redundancies in the past we have always been careful with our money. We have been together nearly 25 years and have 6 years outstanding on our mortgage. We could pay the mortgage off with the money from the redundancy and savings.
Should we do that? We want to....sooooo confusing....i'm not sure if he'll get any benefits and do they look at our savings? Would they say, well you shouldnt have spent your savings on the mortgage!
Ive looked on the forum bot cant find anything however I will say i havent looked that hard because I'm a bit emotional at the moment!

getmore4less

What's the interest rate?

One option

Live of your wage and pay the mortgage from the redundancy perhaps with some overpayments.

at least then if you can't live of the wage you still have the money to fll back on

Contributions JSA for 6 months then problem will likely be your earnings will limit means tested

chrissiewants2save

Interest is 2.79%
Trouble is I seem to recall reading somewhere that if you 'spend' your savings on paying off a mortgage then you may be in a position that with means tested you could be eligible for some benefits however because you have chosen to do this the savings (albeit gone) are taken into account for means testing therefore not eligible.

cb1979

The other saving with paying the mortgage off is you can cancel your life cover premiums on you mortgage and any payment protection payments which will save a few pounds a month, and at least with the mortgage paid off you have always got a roof over your head

Your Husband will get 6 months contribution based JSA no matter how much you have in savings as long as you have enough contributions paid in the last couple of years

Good Luck

getmore4less

chrissiewants2save wrote: »

Interest is 2.79%
Trouble is I seem to recall reading somewhere that if you 'spend' your savings on paying off a mortgage then you may be in a position that with means tested you could be eligible for some benefits however because you have chosen to do this the savings (albeit gone) are taken into account for means testing therefore not eligible.

What benifits would you get if you had no savings?
no point in worrying if you would not get any anyway.
How secure is your job.

Any early payment charges on paying off the mortgage

With a rate of 2.79% you could probably get very close to that in savings so the cost of keeping the cash is quite low.

What other savings/emergency funds do you have, depleteing savings and being very tight on income is a big risk.

princessdon

You need to look at the bigger picture.

The only benefits you'd get with you working is £71 pw JSA and you'd get this with savings.

If you were both unemployed you'd get £111 pw (with savings).

The biggest benefit is housing and as you'd have no costs you'd get nothing anyway, so could be left with no back up money and only getting £111 pw (plus CTB).

Also remember that under £16K savings allows for benefits - they just reduce the amount and under £6K allows for full benefits.


It's a personal decision but I wouldn't leave myself with nothing if I decided to pay off

Also Yes they can decide you used it to claim benefits and treat you like you still had the money

lazer

If you are working full time - then you would not be entitled to means tested benefits anyway.

I would say - pay off the mortgage but get a financial advisor to check it over and see that it is the best course of action for you. (and get and keep documentation to counteract any future deprivation of assets claim)

Financially I would assume you would be better off in the long term, and probably the short term if you paid of the mortgage.

At a rate of 2.79% - that is probably similar to what most savings would pay and you would be saving any related costs such as insurances etc.

As you are not currently or likely to be receiving means tested benefits, you are takin this decision on a purely financial basis and without the intention of depriving yourself of assets to claim benefits I do not think it would be considered deprivation of assets.

If you were not working and you were to receive MTB after the cJSA claim, then it would be a different story

fatbelly

Without knowing more about your situation and your wage, it's imossible to know whether you would qualify for any means tested benefits and whether deprivation of capital might be an issue here.

You know the details so plug them into this calculator and see what it says.

http://www.turn2us.org.uk/benefits_search.aspx

chrissiewants2save

I work 28 hours and take home £1400. We have one son. I don't think that we would get any benefits.

chrissiewants2save

fatbelly wrote: »

Without knowing more about your situation and your wage, it's imossible to know whether you would qualify for any means tested benefits and whether deprivation of capital might be an issue here.

You know the details so plug them into this calculator and see what it says.

http://www.turn2us.org.uk/benefits_search.aspx

Thank you again

Sycorax

Apart from the obvious working out if you can get more interest investing the redundancy vs what interest rate you're paying on your mortgage, there is the emotional aspect to this...

Paying off a mortgage is aspirational and relieves you of a psychological millstone. So this may not be as 'simple' as working out the finances, there may be head versus heart issue that you need to resolve too...

You don't mention what sector your hubby works in or his pension arrangements. But there may be a possibility that his pension scheme allows to claim pension early if made redundant. If he can claim his pension at 55 or 60, would this make a difference?