devil and deep blue sea!!!

jlawrence

I hope that I am in the right place. This is a chicken and the egg question.


We have a £100,000 mortgage which is currently due for repayment in 2020. Our home is currently valued at about £375,000. When we took it out 4 years ago it was on an interest only basis as we deposited the personal injury compensation and a small inheritance in a savings account that is attached to the mortgage - Woolwich Open Plan scheme.
We have access to this £100,000 if need be, but we don't want to touch it as although it doesn't earn any interest, no interest is charged on the mortgage. It is there simply to repay the mortgage debt in 6 years time.


Now I recently claimed Income based ESA, but they have treated this £100,000 as capital and say that we can't have any income. They have told us that we have to live off it. I will not be going back to work due to illness/disabilities. Likewise my wife is also seriously disabled through the same accident.


If we have to live off this money, not only will the mortgage start charging interest but how will we be able to clear the mortgage in 2020? At the rate of our spending of £120/£140 a week + whatever mortgage interest there is of this money, by 2020, the compensation and inheritance will be down to about £56000, leaving us a shortfall of about £44,000!!


Hope someone can see the light in this tunnel.

nannytone_2

cant you claim conts based benefit?
if you have worked and paid NI in the tax years 11/12 and 12/13 you can claim conts based ESA and it will last for a minimum of a year.
otherwise, you use to 1000k to live and then sell the property and downsize ( you have 275k equity... so enough to buy a smaller property) when the mortgage becomes due

Poppie68

Have you looked at claiming PIP to see if either or both of you fit the descriptors. Sorry can't post a link at the moment.

jlawrence

Thanks Nannytone, Of course that is a possibility, but why should we? I thought that personal injury compensation was exempt from capital. Having looked on this site I found that others that had this type of mortgage, a set off one, that the DWP shouldn't touch the capital which is there to repay the mortgage? Surely if we had have used the £100,000 to buy the house instead of using it to secure a mortgage, we would have got benefits? What is the difference?
Are you saying that all set off mortgages where there is capital attached should be spent on living costs?
No I can't get the contribution one as I didn't work the full year in 12/13 as we lived on our other savings which have now gone for 7 months.

jlawrence

Thanks Poppie. I thought of that too, but given the absolute mess that PIP is in (a) I don't think that I would get a fair hearing and (b) we need the money now, not in 12 months time.

Poppie68

jlawrence wrote: »

Thanks Poppie. I thought of that too, but given the absolute mess that PIP is in (a) I don't think that I would get a fair hearing and (b) we need the money now, not in 12 months time.

The money if it's paid now or in 12 months time will help for day to day expenses, it's always worth claiming as if and when you are successful in your claims it will help ease a burden.

The trick is evidence, i don't now the nature of yourself and your wifes injurys and subsequent disabilties but gather all evidence ie: Hospital appointment letters, letters from any health professional sent after you have been seen in clinic in fact everything.
Ask your GP to do a supporting letter detailing all injuries/disabilities and the effect it has on your life and care needs also a copy of your repeat prescription.

Get help completing the forms from either CAB but your local council should have welfare officers that can visit your home and help you complete the forms...they are very experienced in filling these forms out and their help is invaluable.

If you do decide to apply for PIP and require a welfare officer to help, call the DWP to request forms for both of you, don't put the phone down make the call then to book the officers visit as they are very busy and you may have a couple of weeks wait .

It is also beneficial to call the DWP and inform them you have got a welfare officer visit booked as they will make a note and which comes in handy if the forms are a little late back.

tomtontom

This and the OP's other posts are beginning to sound a little familiar ...

pmlindyloo

I am presuming that to be eligible for the interest only mortgage you had to show proof that you could repay it?

If you start using this money do you lose the interest only mortgage?

I am sure people will start talking about deprivation of capital but because of these particular circumstances I am wondering whether paying off the mortgage now would be considered deprivation of capital.

My thinking is that if you and your wife will be unable to work in the future and will always be reliant on benefits then you would have a concern about possibly losing your home because you could not repay the mortgage. Plus, the fact that the money was as a result of personal injury and would normally have been disregarded for some time (a year?) and permanently if it had been put in a trust.

I can't help thinking that you were badly advised at the time you received the compensation as it should have been put in a trust or used to pay off the mortgage.

Have you had any adaptations carried out on your house because of your disabilities? Or any other reasons why you couldn't downsize - nearness to receive help from your family?

I think it might be worth getting some help as to your options. You could try and speak to a manager at the Job Centre Plus about whether this would be seen as deprivation of capital. To have it in writing would be best. Don't do anything with the money until you know.

Deprivation of capital is using the capital in order to obtain benefits so you must show that paying off the mortgage is vital to your future well being and not primarily to receive benefits.

It is a long shot but could be explored. Of course, if you are able to downsize then that may be your answer to your problems.

Poppie68

tomtontom wrote: »

This and the OP's other posts are beginning to sound a little familiar ...

Ahhh you maybe correct....I suppose it was the TOP DEAL on the right that has him coming back...Flo must be giddy with excitment with the Up to 50% of Mulberry!:D

Housing_Benefit_Officer

Use the capital to clear the mortgage. Sell and downsize.

xylophone

but they have treated this £100,000 as capital

Because it is - having it in a savings account that pays no interest to you because it is off set against your mortgage debt doesn't make any difference to this fact?

It is clear from this http://ask.barclays.co.uk/help/openplan/openplan_interest that the £100,000 is regarded as savings by the account provider.

And from this http://www.thisismoney.co.uk/money/mortgageshome/article-1583962/Offset-mortgages-clear-a-mortgage-early.html

"With interest only paid on the balance between savings and mortgage debt you achieve the same effect as overpaying a homeloan: but the beauty is you can get the money back if you need it."