Support for Mortgage Interest (SMI) questions

allotmentqueen

Hi everyone, I am hoping someone can help with this, as I have found the CAB to be not much use, and impossible to get someone at the job centre to answer the phone!

I am currently getting divorced, and moved out of the family home with my two children into rented, as my ex refused to move out. I had previously given up work to become a SAHM. I would like to move back into the home if he agrees to move out. I am currently getting hosing benefit which I know I could not get, but I would like to claim SMI instead until I go back to work (children now aged 2 and 4 so I am looking for work now the oldest has started school).

The outstanding mortgage is about £105,000, and the monthly mortgage payment is £519 of which £343 is interest at the moment.

How much would I be able to claim on SMI? I know they base it on 3.63% but I don't understand what this means. Also, the mortgage is in joint names so would I only be able to claim 50% of the interest as my ex is working? (this is what I was told at CAB but my solicitor thinks it is wrong, and I can claim it all, and Halifax said they think it is at Job Centre's discretion). Would I have to transfer the direct debit to my account for 12 weeks before making a claim (currently ex pays)? I have been on IS for just over a year.

Thanks for reading, I hope someone knows something about this!

allotmentqueen

Housing benefit not hosing benefit!

ACG

Interest would be approx £320 (im assuming your mortgage has around 27 years to run) - http://www.bbc.co.uk/homes/property/mortgagecalculator.shtml

As for being able to claim it, there is a member on here called Holly Hobby, i think she knows about this like the back of her hand.

Personally, my thought is that you would'nt be entitled to it.

To look at this from the govt or tax payers view, why should they be paying the interest on your mortgage when your ex partner is in a position to pay it and will benefit from it when its sold? (Im not saying thats my view, but im trying to look at it from all angles) - and thats why i dont think you will be able to claim.

But if im being completely honest,since my exams i have never had to deal with it so its fallen out of my head.

holly_hobby

Thanks ACG ....

Whether SMI is payable will depend upon what benefits you are in reciept of, which in your case, and with your assumed age and presuming you have no disability issues ..

Either of ....
Income support
Income based JSA (if you are actively looking for work)

Obv they are essentially means tested benefits, which will take account of the total household income, so if you are deemed qualifying it doesn't matter if the mge is in jnt names or not, you have been assessed as meeting the min income requirements.

If you are elibible and in receipt of one of the above, SMI is paid only in relation to the interest element of your mortgage, upto a max mortgage balance of 200k, and using an interest rate of 3.63% (regardless of what your actual mortgage payrate is).

It does not cover any associated endowment or insurance policies, arrears or further advances which were not used to improve the property (ie if you released equity to pay off a debt, pch a boat, etc, this amount of balance will be excluded from the SMI calc and benefit).

SMI is payable after a 13week waiting period from claim (execpt where the underyling qualification is pension credit), however, as you are currently in receipt of HB this is a little bit of a grey area (with you having temporarily moved out of the marital home and mortgaged property but returning to service an existing mortgage), they may waive this WP, but DWP will advise accordingly.

SMI is completely dependant upon you being in reciept of the underlying qualifying benefit, once you lose that eligibility, you will also lose SMI.

As SMI only cover interest only, it obviously won't address the capital element if you have a repayment mortgage - so unless you can meet this yourself, you would be best placed to ask you lender if they will on a temp basis, switch you (partly or wholly) to an interest only arrangment. Otherwise, you will end up with a build up of capital arrears and possible possession issues from the lender ... so speak to them about this, with a view to re-align the mortgage and its payments (inc missed capital instalments)when you are back in employment/income situ resolved, to which there are several ways to manage this, but this will be for your lender to discuss and mediate with you directly.

Your claim will be via your local DWP/Job Centre.

Hope this gets the ball rolling for you .... wish you well at what will be an upsetting time for all, as any relationship breakdown is.

Holly xxx

allotmentqueen

Thanks to you both for replying.

ACG I wasn't asking for any opinions as to whether I deserve SMI. My ex wouldn't be in a position to pay the mortgage as he would be renting somewhere else for himself, and he is already paying me child maintenance. The SMI payment would be just over half of my current housing benefit so a significantly lower burden, plus I could claim HB whilst in work whereas my entitlement to SMI would stop. So it actually helps to lower the housing benefit costs overall - surely a good thing from the taxpayer's viewpoint don't you think?

Anyway thanks for referring me to holly hobby. You have clarified many things that the CAB were unsure of so that is very useful. I would be able to make up the capital repayment part of the mortgage from my maintenance, although overall I would be worse off in the short term it would be better to keep the house on myself as the chances of me buying another one if this one gets sold are slim to none! I should mention that the original plan was to sell the house but the asking price has been reduced so much after over a year that there is no equity to divide up, and my ex does not want to live there.

Interesting point about the waiting period, I will have to check with the job centre. I have been on IS for just over a year as I have 2 children who were only 1 and 2 at the time we separated so they may waive it on those grounds, I will need to check before (if / when) I end up negotiating a moving date with ex.

Thanks again for your help.

holly_hobby

Pleasure Queenie .... glad I could help

Here when and if you need us again ....

Hope all goes well for you in the job hunt too

Holly xx

allotmentqueen

Thanks holly, also for your kind comments, it's been an awful year but looking up now, plus I've had a couple of job interviews recently which is encouraging. Onwards and upwards!

ACG

Your taking what i said personally. It wasnt meant to be personal. I was trying to work out whether you would be or not and give my reasoning behind my thoughts.