ESA Mortgage help Please

fingledingle

Hi my Sister-in-law has had to give up work, due to illness, she is a single parent, she is in receipt of ESA and is in the support group. her mortgage is £350 pounds a month, which she has just been awarded £63 interest a month for, she only has about 5yrs left hence the balance difference, she has around £287 capital shortfall a month, if that was to continue she would end up being repossessed.
Would the DWP have any objections to my Husband and I paying the capital shortfall? we propose to do it via direct payment into her mortgage account, could this cause her any problems? We really want to help but are concerned it could be classed as income, when it is not, it is just for securing her home.

Dogger69

Unless you have an interest in the property, it is possible they will treat your payment as income. Could she change to an interest only product? Most lenders will allow this if the borrower is experiencing hardship, and there would be nothing to stop you putting money aside to pay off the capital at a later date.

fingledingle

Dogger69 wrote: »

Unless you have an interest in the property, it is possible they will treat your payment as income. Could she change to an interest only product? Most lenders will allow this if the borrower is experiencing hardship, and there would be nothing to stop you putting money aside to pay off the capital at a later date.

Thanks for your reply I went with her, to the building society today, they said she could could not have a new deal, as her income was to low and had no potential to improve health wise, they said she could make interest only payments for six months and they would look at it again, it's madness she owes 21,000 on 250,000 home, it seems the government would rather she lost her home than let us help. I think we may encourage drop her claim for ISMI and we will pay it all.

Adereterial

As long as you pay her lender directly, and she does not receive the money herself, there will be no issue with DWP. If you pay the money into her account, there may be a problem.

Horseunderwater

DWP and Income related ESA. If you want to pay the lender on your sisters mortgage for the balance each month - then it should not affect her ESA in anyway as you will not be paying her, but the lender direct - so go ahead and do that if that is what you want to do. It only affects her ESA if you pay her and she then pays the lender. So paying the balance direct to her lender is OK as it will not go through her bank account. It is nice that you can help her out like that. Also if she is on say their Standard variable rate she may be able to ask for another lower deal with same lender which could help as well. You have to know what to ask for with lenders. I was recently able to do exactly that and I am on ESA IR Support group too. Always worth ringing up the main mortgage department and not speaking to people in branch as they often say no even when there are people who can help out. That was certainly true with Santander for me.

fingledingle

Adereterial wrote: »

As long as you pay her lender directly, and she does not receive the money herself, there will be no issue with DWP. If you pay the money into her account, there may be a problem.

Thanks for your reply, That's our intention, we foresaw the potential for problems by paying direct into her current account, we will set up a direct debt to her mortgage account, we will phone and also write to the DWP for clarification, so there is no confusion, the poor woman has no chance of ever returning to work in the next few years, and we cannot sit by while we are in the position to help secure her home.

fingledingle

Thanks Horseunderwater thanks for your advice, we are feeling better about the whole issue knowing we can help, Just did want to cause any problems for her, we have thought about buying 9% share in her home to clear her mortgage, then gift it back, I think she is on 2% above base with Nationwide

[Deleted User]

billandjean wrote: »

She is in a similar but different situation as a friend of ours. He only has a mortgage debt of approx £15000 on his home that is worth £200,000. It is an interest only mortgage which was taken out 5 years ago to see him through a period of illness. Unfortunately the illness has become permanent now and the mortgage was due to be repaid last month. He, like your daughter was told that as he is on a low income now, no new deal can be offered. He was given 30 days to find £15,000 or his home would be repossessed. Currently he is looking for a rented property whilst staying with us as he has handed the keys over as a voluntary repossession.
Banks and the government just don't want to help do they.

that sounds like madness,surely he could have found a buyer even at a greatly reduced price,cleared the mortgage and down-sized
as perhaps could the OP

fingledingle

billandjean wrote: »

That's what I thought was best but the bank insisted that it was either £15,000 within 30 days or get out. There is no way that he could have sold the house within that 30 day period. So his choices were very limited. Either borrow £15,000 from somewhere else at stupid rates or give up, get out and let the bank sort their problem out themselves. Seems bloody ridiculous all for £15,000 seeing that the bank have up to £200,000 of security. But that is banks for you and as we all know banks and the government work very closely together with both never giving in. Better put up and shut up as this isn't my question and I'm interfering.

You are not interfering, I would really encourage your friend to go back to the bank, get the keys back and negotiate with a view to selling, they cannot reposes after 30 days, a judge would laugh them out of court, and insist that all options be explored, it will take at least six months, for the right price in that time he can secure a buyer, also I would ask a question on the mortgage board, all is not lost he can turn this round, don't fall for their lies. I would report them to the ombudsman for not exploring all options and taking advantage of a sick Man. this is outrageous:mad: https://forums.moneysavingexpert.com/discussion/comment/61738875#Comment_61738875

Thrugelmir

fingledingle wrote: »

it's madness she owes 21,000 on 250,000 home, it seems the government would rather she lost her home than let us help.

I fail to see why the property cannot be sold and a property bought outright with the remaining equity. Many people face misfortune throughout their lives. Something they have to face up to and deal with in the best way possible. Sorry if this sounds harsh, but with £229,000 of equity they are in a far better place financially than many other people at the current time.

benefitbaby

billandjean wrote: »

Oh thanks, I thought I couldn't talk about someone else on this question. I hear what you are saying and I have just had a chat with him. He has shown me a form that he and the bank signed when he went in for the interview and they asked him to bring the keys in giving over voluntary possession as he will never be able to settle the £15000 demand. Having that signed agreement are you saying that he can either backtrack and demand the keys back or break in and change the locks?

Read the form and small print carefully to see if their is a get out clause or cooling off period and seek specialist advice...
http://england.shelter.org.uk/get_advice/how_we_can_help/housing_advice_helpline