Mortgage interest payments

croyland87

Hi I want to ask this question for my friend he gets interest payments on his mortgage and is on pension credit in 2 weeks time he will be 65 and will be going on to state pension will the monthly payments stop or carry on.

Thank you

pmlindyloo

Support for Mortgage Interest is only paid if you are on a means tested benefits like JSA, ESa and Pension Credit.

So, if your friend continues to get PC then his SMP will continue.

Whether the PC continues will depend on how much his state pension is (and any other occupational pension, if relevant)

When he gets his state pension he will need to inform Pension Credit of his change of circumstances.

He can put his details in to the benefit calculator on https://www.entitledto.co.uk to see if he will still be eligible for PC after receiving his state pension.

BigAunty

It's also worth your friend monitoring the situation for how the government may change the SMI scheme in future.

Approx around half of the 250,000-ish property owners people receiving it are PC claimants which means 100,000 plus households have retired without the means to pay off their mortgages.

The government were in consultation a couple of years ago with various bodies about proposals to make this subsidy a loan (by putting a charge on the property, for example) or introduce more conditionality (applying time limits to claimants who can claim it without limit now like PC recipients).

It is the current government's view that a property owner who doesn't have a realistic prospect of resuming their mortgage payments through employment should not be a burden on the taxpayer.

Not really sure of any concrete changes to SMI that are coming out of the consultation process but worth keeping an eye on.

Current arrangements for SMI are due to expire in March next year but it will perhaps be extended once again like in the past.

croyland87

He has received a letter from DWP that he will be getting £189 a week state pension and he does not have a private pension.

sportsarb

Is he entitled to other premiums such as disability premium, severe disability premium?

If so the PC might still be above SP.

croyland87

sportsarb wrote: »

Is he entitled to other premiums such as disability premium, severe disability premium?

If so the PC might still be above SP.

He gets DLA but none of the above.

silvercar

Assuming he still gets PC:

The benefit works well for your friend, by moving to PC the length of time that SMI can be paid is unrestricted - otherwise it would only be payable for 2 years. Also for claimants already in receipt of SMI the loan amount it is payable on is still £200k max, for new claimants it is only £100k.

It is paid at a standard rate of 3.63%, this may be more or less than your actual mortgage rate charged, so every claimant needs to keep a close eye on whether they are building up arrears or are in credit. If in credit the credit amount is used to part repay the capital owed.


Source: https://www.gov.uk/support-for-mortgage-interest/what-youll-get

croyland87

silvercar wrote: »

Assuming he still gets PC:

The benefit works well for your friend, by moving to PC the length of time that SMI can be paid is unrestricted - otherwise it would only be payable for 2 years. Also for claimants already in receipt of SMI the loan amount it is payable on is still £200k max, for new claimants it is only £100k.

It is paid at a standard rate of 3.63%, this may be more or less than your actual mortgage rate charged, so every claimant needs to keep a close eye on whether they are building up arrears or are in credit. If in credit the credit amount is used to part repay the capital owed.


Source: https://www.gov.uk/support-for-mortgage-interest/what-youll-get

No he does not get pension credit its stopped just state pension for a single person.

pmlindyloo

croyland87 wrote: »

No he does not get pension credit its stopped just state pension for a single person.

In that case he is going to have to make some decisions as he will no longer get Support for Mortgage Interest.

Could he downsize/take in a lodger?

allen35

Is he single, how much outstanding on his mortgage, any savings and what rates of DLA does he get?

croyland87

pmlindyloo wrote: »

In that case he is going to have to make some decisions as he will no longer get Support for Mortgage Interest.

Could he downsize/take in a lodger?

Taking in a lodger is not possible