benefits and mortgage

moll73

hi everyone i wonder if anyone could please give me some advice, i bought my house about 10 years ago when i was a working, 5 years ago i had a accident and have been left unable to work, as my disablity gets worse im starting to realise that i am going to need to move, the social takes my mortgage payments from my benefits, what i need some advice about is #would i be able to sell my house and buy a more suitable disabled property and still get help with mortgage payments or should i sell then rent some where, or would i be able to rent my house out and rent privatley, i really do not know much about this type of thing so if someone could point me in the right direction i would be most greatful many thanks xx

Dovah_diva

You can sell your current home and the money will be ringfenced so it doesn't affect your benefits for a period of time (six months or a year, not sure which) as long as you use it to buy a new home. Don't know if you'll continue to receive mortgage support on a new property - I would hope not, to be honest. How confident are you that you'd even get offered a new mortgage?

You can't rent out your current home and expect to receive benefits towards the rent of another property. Not sure if any rent you recieve would be classed as income and therefore deducted from your means tested benefits.

BigAunty

"the social takes my mortgage payments from my benefits" - are you referring to the support for mortgage interest scheme where the govt pays the interest only part of the mortgage?

If so, do look into the terms of the scheme as I believe (but you must check) that it is not designed to operate at a new property and isn't transferable, it's about helping the owner with their current property.

Look at the Shelter website for information on your options. They offer free expert advice and have a helpline for distressed owners.

There is a mortgage rescue scheme that is in place for certain types of vulnerable groups/benefit claimants whereby a local social housing landlord buys the property and permits the ex-owner to occupy it as a tenant (I don't know if this is as a social housing tenant with a secure tenancy or a private tenant, see the Shelter website). In this scenario, a former owner can claim HB towards their housing costs (whereas outside of this scheme, an ex-owner who continues to live in the property as a tenant cannot access HB for the first 5 years).

What you need to consider is the size of your property versus the bedroom tax/spare room subsidy which means HB claimants in social housing cannot claim 100% HB if there are unoccupied bedrooms. Also, for private housing tenants, there are caps and local rates of HB (Local Housing Allowance for private sector properties) that again depend on size entitlements. Something for you to research and bear in mind. You should identify any potential shortfall in between the rent and the LHA/HB you will be entitled to as you will need to pay the difference out of your existing benefits.

Although I'm not familiar with social housing allocation (there have been changes to it that permit social housing landlords to operate with greater discretion, making local changes to their allocations policy) in the past, it was possible to secure social housing despite being a property owner - the ownership may be taken into account, but so, too might your health/medical needs. So check that out, too, by contacting your local social housing landlord(s).

Yes, you can sell your current property and you will be given time to buy a new one without the capital affecting your access to means tested benefits (could another poster clarify this time limit?). Is the equity in your current property sufficient to buy a new property outright and pay for the modifications? Otherwise, your low income/benefits status will mean it could be very difficult to find a mortgage - you can contact an independent broker to see what your chances are.

Renting out your property is a risky prospect - ask the housing forum on this proposal. How will you cope with a void or a tenant trashing the property? Will your lender even give you permission to rent it out as you don't have employment income?

I don't know if you can claim HB on another property if you rent out your property but there is a Housing Benefit Officer on this forum who will be able to comment on this.

Housing_Benefit_Officer

moll73 wrote: »

hi everyone i wonder if anyone could please give me some advice, i bought my house about 10 years ago when i was a working, 5 years ago i had a accident and have been left unable to work, as my disablity gets worse im starting to realise that i am going to need to move, the social takes my mortgage payments from my benefits, what i need some advice about is #would i be able to sell my house and buy a more suitable disabled property and still get help with mortgage payments or should i sell then rent some where, or would i be able to rent my house out and rent privatley, i really do not know much about this type of thing so if someone could point me in the right direction i would be most greatful many thanks xx

Yes you can sell your property and use the capital to buy another.

Are there any mortgage providers that will give you a mortgage on another property when you are on benefits?

If you sell and then rent a property any capital over £16k will disqualify you from any Housing Benefit. Unless you intend to use the capital to buy another property then any capital could be disregarded for up to 26 weeks - I say could not will - if you have no intention to buy another property and don't have a mortgage offer then any proceeds from the sale over £16k will disqualify you from Housing Benefit.

If you rent out your property the things we will look at are:-

a) What is your property worth on the open market and what is the outstanding mortgage - if your property has a capital value then it will be treated as capital when you claim Housing Benefit on a rented property.

For instance property is worth £100k and the outstanding mortgage is £70k then the property has a capital value of £30k - we deduct 10% (to cover sale costs etc) so the property has a capital value of £27k and that would disqualify you from any Housing Benefit entitlement.

b) Rental income is treated as income. We deduct your mortgage payment and any expenses such as insurance, repairs etc and anything left over we treat as income.

TOBRUK

moll73 wrote: »

hi everyone i wonder if anyone could please give me some advice, i bought my house about 10 years ago when i was a working, 5 years ago i had a accident and have been left unable to work, as my disablity gets worse im starting to realise that i am going to need to move, the social takes my mortgage payments from my benefits, what i need some advice about is #would i be able to sell my house and buy a more suitable disabled property and still get help with mortgage payments or should i sell then rent some where, or would i be able to rent my house out and rent privatley, i really do not know much about this type of thing so if someone could point me in the right direction i would be most greatful many thanks xx

Hi moll73, I can relate to your predicament as I was in the same position as you are now and I have been there and done it!!! I hope that my post is understandable - that I put it across clearly enough. This may be a long post!

I was living in a house (100 miles away from family) and worked for many years until after a period of ill health, accidents and disability had to leave work. After being gravely ill and then on top of everything, falling down stairs and ending up in hospital with fractured skull and smashed wrist and hand. I was strongly advised (by health professionals) as I was living alone, with a chronic illness, disability etc that the house I lived in was no longer suitable and needed to move or have extensive adaptions made.

I had a mortgage and when I could no longer work due to ill health, I was receiving help with part of interest payment of mortgage. I also had to move nearer family for help and support. I had to sell my house and look for a bungalow in the area where family lived. I don't know your situation, but I had a small mortgage and a large portion of equity. I found a suitable property - a bungalow where the layout was suitable for my needs and very little adaptations to make. I sold the house and bought a bungalow in 2011. I could not buy it outright after selling the house but the mortgage people EXTENDED as well as the term of the mortgage, and as I had plenty of equity, even increased the mortgage.

I saw a mortgage broker (make sure you see a reputable one) who found the best provider and price of the mortgage. As the mortgage was TRANSFERED to the new property everything went extremely smoothly.

I would advise you to write to the benefit office (keep them informed - always) to explain your situation and intention to move to a more suitable property for your needs - ALWAYS WRITE THEM A LETTER so that you have correspondence to keep in black and white in case you need to refer to - do not phone for advice. This is what I did and they replied with all the answers to the questions I asked - they were very helpful. I still get help with the interest part of the mortgage - which is helpful but it only covers a small part. You must work out the figures to see how much your payments will be. A mortgage broker will help with this. My mortgage provider was willing for me to transfer and increase my mortgage as I had plenty of equity.

I would also advise you to speak to your GP and any consultants you are under about your situation. I was lucky with the health professionals I was under, they wrote letters supporting my intention to move so that I could send copies to the benefit offices - stating that the move was adviseable and in my best interest for my health and wellbeing.

I hope this is helpful to you.:)

Caz3121

TOBRUK wrote: »

I saw a mortgage broker (make sure you see a reputable one) who found the best provider and price of the mortgage. As the mortgage was TRANSFERED to the new property everything went extremely smoothly.

Some good advice in your post but a couple of points

Porting a mortgage is often possible but the OP would still need to fit the criteria as if they were a new applicant and find a lender that will consider their benefits as income and that they are sufficient to service the mortgage

There was a post recently (I will try and find it) from someone who was declined SMI as they were already on benefits when they took their mortgage out (this case may be different as you/OP were/are already receiving SMI)

Morglin

According to their website, Halifax will consider mortgages to those on disability benefits, subject to other criteria.

"We'll consider different kinds of income, including overtime, commission and disability benefits. If your income changes from month to month, we'll take an ..."

http://www.halifax.co.uk/mortgages/help-and-advice/guides/mortgage-process/qualifying-for-a-mortgage/

There is also another firm that specialise in mortgages for disabled, and on benefits:

http://www.mortgages-remortgages.com/disabled-mortgages.php

I don't know how good or bad the above are, but it can be done.


Lin

TOBRUK

Caz3121 wrote: »

Some good advice in your post but a couple of points

Porting a mortgage is often possible but the OP would still need to fit the criteria as if they were a new applicant and find a lender that will consider their benefits as income and that they are sufficient to service the mortgage

Hi Caz,
Yes I understand and I agree with you.

There was a post recently (I will try and find it) from someone who was declined SMI as they were already on benefits when they took their mortgage out (this case may be different as you/OP were/are already receiving SMI)

I'm not surprised that they were declined - How is it possible to take out a mortgage if the situation is that at the time you are on benefit - surely this does not make sense?

However, my situation was that I was working when I took out a mortgage and was in full time employment when I bought the house - I would never have even tried to buy a house if I was on benefit - I don't think that should be allowed or even considered! Years ago when I took out a mortgage I never ever thought that my life would change so much - I would still be working if I was able. YOU CAN NEVER KNOW WHAT LIFE WILL THROW AT YOU!! I thought I was invincible back then. I did not think I would become ill, have accidents and end up with a disability! It wasn't part of the plan, but life had different ideas for me

Porting a mortgage is often possible but the OP would still need to fit the criteria as if they were a new applicant and find a lender that will consider their benefits as income and that they are sufficient to service the mortgage

Of course you have to meet the criteria with the lender (it is not a certainty) to port a mortgage - I DID, I had plenty of equity and did not have many years left on the mortgage.

The poster did not give details of their situation. I only posted my situation and outcome so that they know that it can be done, because I did do it. I had to move because of my health and disability - there was no choice in the matter. At that time I never knew what the situation was regarding my mortgage, buying a suitable place to live to meet my needs, or how to go about it. It was not done by choice.

lld01

If you move directly from one mortgaged property to another, you will still recieve SMI on the new property (but no more that you were receiving previously).

BigAunty

lld01 wrote: »

If you move directly from one mortgaged property to another, you will still recieve SMI on the new property (but no more that you were receiving previously).

Can I ask if you are able to produce a link to support this?

I'm not an expert in SMI so I'm not disputing it but would appreciate further info. I am surprised that there is a scheme that permits the public purse to continue paying the mortgage for a person at a new property from the outset.

Here is a helpful link on mortgage issues for the OP

http://www.moneysavingexpert.com/mortgages/mortgage-arrears-help

It's also worth the OP looking at how the govt is proposing to change how the SMI scheme may operate in the future. I have read articles that show the current govt cannot see the point in providing an indefinate payment of someone's mortgage if they cannot pay off the balance through employment. They seem to be preparing to shake up this scheme with greater conditionality. I don't know what form this will take.

Currently I am aware of people receiving this for over 10 years and that over half of those on the scheme are homeowners receiving pension credit who, as they are of state pension age, have managed to reach the end of the mortgage term's without having fully paid it off and have no realistic prospect of employment to do so (around 100,000 households). I expect this is why the govt are reviewing SMI (as well as having the reputation for slashing benefits in general and not taking care of vulnerable people).

Certainly it was clear from what I read that they felt anyone who could not complete their mortgage payments and clear the whole term through employment should sell up and rent, that SMI should be temporary, that people should protect themselves against loss of income through some sort of mortgage insurance.

ontiptoes

I sold my house and bought a bungalow wile I was claiming benefits including SMI.
The mortgage company Nationwide and the DWP both agreed in principle before I sold up.
There were stipulations made by both, that the total mortgage was less than what I had been paying,(Less for dwp to pay out) the equity would be more ie a cheaper property,(more security for the mortgage) and that the reason for moving was approved, ie I kept falling down the stairs and needed to live on a single level.
Everything went through smoothly with no break in payments