Help with mortgage payments while out of work?

TatsP

I've worked freelance for 9 years and have seen work dry up over last 9 months. I decided to sell my house and buy a smaller one to reduce my outgoings (I'm a single parent with two young kids). My house is under offer but I haven't yet found somewhere to buy. My current freelance job is about to end and I don't have anything lined up. I've got enough money for a couple of months in the company business account but am trying to prepare myself for a sticky period. Should I go ahead with the house sale and keep some of equity back to live off until I get more work? Can I claim housing benefit either if I go ahead with the house sale and go into rented (but with over £100k equity sitting in bank), or should I slow down on house sale and carry on paying my mortgage for now? Can I claim housing benefit to help pay the mortgage? Also, if I were to ask for a mortgage holiday, would that affect my credit rating or future mortgage deals once I'm on my feet again? Sorry, lots of questions, just trying to work out what to do...

holly_hobby

TatsP wrote: »

Can I claim housing benefit either if I go ahead with the house sale and go into rented (but with over £100k equity sitting in bank), or should I slow down on house sale and carry on paying my mortgage for now? Can I claim housing benefit to help pay the mortgage? Also, if I were to ask for a mortgage holiday, would that affect my credit rating or future mortgage deals once I'm on my feet again? Sorry, lots of questions, just trying to work out what to do...

Housing benefit - rent assitance

HB is meants tested, and for low income and welfare benefit claimants - to which if your savings exceed 16k you don't qualify for rent assistance (and with a very decent 100k on deposit post sale, you'll be well and truly bust !).

Help with Mge - Support for mortgage interest

If you have a mge, you apply for SMI (support for mortgage interest) with DWP, and although as a stand alone benefit its not means tested, the qualifying benefits it depends upon are.

If you choose to delay sale or try and remain in situ, you may apply to DWP for SMI (support for mge interest) assistance upon qualification for one of the following benefits.

Income Support
income-based Jobseeker’s Allowance
income-related Employment and Support Allowance
the guarantee element of State Pension Credit (obv won't apply if you pre-retirement)

SMI is capped at a mge balance of 200k, may also cover some additional property related loans ie for essential repairs and/or improvement, and does not cover arrears.

It currently pays at an interest rate of 3.63% (regardless of what your acutal payrate is) and commences payment after a 13 week waiting period after your claim -and may be timebound depending upon the circs of claim.

You'll be advised by DWP of eligiblity etc when you make application for your benefits - which may initially be done on line.

A mortgage holiday will be recorded by the lender with CRAs as missed payments (which is accurate) - however any lender reference won't class the mge as being in default (arrears) - as long as the payment holiday was permitted and authorised (to which you're usually restricted to a month or so in 1 mge calender yr, but this is lender dependant, so this obv won't offer a longterm solution to payment difficulties).

If you are struggling with your mge payments, and you are on a repayment mge, you could ask they lender if they would temporarily change you to IO for the time whilst the property is actively being marketed for sale (if they agree, they will put a timeframe on this).

If having switched, you are also struggling with the IO element (either entirely if you don't qualify for SMI, or partly due to the 200k cap, and/or because your acutal payrate exceeds 3.63% so there is a residual amt os after SMI is paid), you could ask your lender (and with apx free equity of 100k, you do come from a good place), if they will consider rolling up the payment arrears onto the os mge balance - which of course will be entirely redeemed upon property disposal.


Hope this helps

Holly