can I use my inheritance to buy the house I live in?

GirlFromMars_2

benniebert wrote: »

All very interesting and informative. The whole thing sounds a bit woolly to me with no clear regulations to follow only the mood of the Decision Maker on a particular day.
If you can buy (assuming that it is allowed) a home with an inheritance, why can't you pay off the mortgage on the one you are living in? As an example someone I know has an interest only mortgage of about £50,000 and a year or two back had some insurance policies mature which produced about £55,000. The intention was to repay the mortgage and do a bit of decorating with what was left. He attempted to claim Income Based ESA and he was told by the DWP that this money meant that he can't claim anything - he has to use it to live off. This is what he has been doing and obviously now doesn't have enough to repay the mortgage debt in three years time. He tells me that they are going to have to sell up and rent.


So why is there a difference?

Oh your friend? You mean Andy?

Please stop trolling Deprivation of Capital threads.

And for anybody actually interested, paying off a mortgage is supposedly treated differently to buying a property outright. But in my opinion in either case you should write to the DWP/LA in advance, lay out your situation and ask for a decision from a Decision Maker on Deprivation of Capital.

Each individual's situation is so different, each case needs deciding differently.

benniebert

GirlFromMars wrote: »

Oh your friend? You mean Andy?

Please stop trolling Deprivation of Capital threads.

And for anybody actually interested, paying off a mortgage is supposedly treated differently to buying a property outright. But in my opinion in either case you should write to the DWP/LA in advance, lay out your situation and ask for a decision from a Decision Maker on Deprivation of Capital.

Each individual's situation is so different, each case needs deciding differently.

With respect there is no reason to ask a Decision Maker to give a ruling where paying off the mortgage is concerned. It is specifically referred to in the DM's manual that paying off a mortgage earlier WILL be treated as Deprivation.


To me it doesn't make any sense.


You could have two identical people, one rents their current home and the other pays a small mortgage on it. They both inherit the same amount.
Yet it seems that the former can buy their rented home outright and NOT be caught by the Deprivation rules and NOT have the capital used in a means tested assessment.
Whilst the latter not only would be treated as still having the capital if they did pay off the mortgage, but would be refused any means tested benefits because of the notional capital.

GirlFromMars_2

benniebert wrote: »

With respect there is no reason to ask a Decision Maker to give a ruling where paying off the mortgage is concerned. It is specifically referred to in the DM's manual that paying off a mortgage earlier WILL be treated as Deprivation.


To me it doesn't make any sense.


You could have two identical people, one rents their current home and the other pays a small mortgage on it. They both inherit the same amount.
Yet it seems that the former can buy their rented home outright and NOT be caught by the Deprivation rules and NOT have the capital used in a means tested assessment.
Whilst the latter not only would be treated as still having the capital if they did pay off the mortgage, but would be refused any means tested benefits because of the notional capital.

So, what you are saying is that your "friend" never asked for a decision from a Decision Maker stating their case.

Endowment mortgages are different from a regular mortgage. The Decision Maker may well have decided to treat them identically, but if you never ask you never will find out.

And I believe someone with a mortgage could sell their current home & buy somewhere new whilst still being on benefits. Again though, ask a Decision Maker would always be my advice.

I really wish people would stop giving examples where they/their friend/their imaginary friend, chose to interpret the rules themselves without actually asking for a decision from a decision maker.

And for the record, this has nothing to do with the OPs question, the OP wishes to buy outright, not pay off a mortgage.

lighting_up_the_chalice

benniebert wrote: »

So why is there a difference?

Because the renter who buys is using their capitol to negate the need for HB. The mortgage payer who buys is securing their asset.

benniebert

lighting_up_the_chalice wrote: »

Because the renter who buys is using their capitol to negate the need for HB. The mortgage payer who buys is securing their asset.

Thanks, yes I can see the logic in having the HB claim negated, but the latter currently gets help with their mortgage interest of just over £36 a week. If they were allowed to pay off the mortgage, the DWP would cease making these payments.


So HB or SMI, the government would save.

lighting_up_the_chalice

benniebert wrote: »

Thanks, yes I can see the logic in having the HB claim negated, but the latter currently gets help with their mortgage interest of just over £36 a week. If they were allowed to pay off the mortgage, the DWP would cease making these payments.


So HB or SMI, the government would save.

Yes, but to a varying degree. SMI is usually a lower amount, not paid for the first 13 weeks and, in many cases, limited to a 2 year duration. It also rarely (if ever) covers the entire mortgage liability.

benniebert

lighting_up_the_chalice wrote: »

Yes, but to a varying degree. SMI is usually a lower amount, not paid for the first 13 weeks and, in many cases, limited to a 2 year duration. It also rarely (if ever) covers the entire mortgage liability.

Thanks, but I still don't see the fairness in it all. The alternative is to sell up and buy another property outright and in doing so not only will the means tested benefits start up again, but that they will own a home of their own. Much cheaper and less hassle if they could have settled the mortgage on the old house.

benniebert

GirlFromMars wrote: »

So, what you are saying is that your "friend" never asked for a decision from a Decision Maker stating their case.

Endowment mortgages are different from a regular mortgage. The Decision Maker may well have decided to treat them identically, but if you never ask you never will find out.

And I believe someone with a mortgage could sell their current home & buy somewhere new whilst still being on benefits. Again though, ask a Decision Maker would always be my advice.

I really wish people would stop giving examples where they/their friend/their imaginary friend, chose to interpret the rules themselves without actually asking for a decision from a decision maker.

And for the record, this has nothing to do with the OPs question, the OP wishes to buy outright, not pay off a mortgage.

Point noted - this is my last post on this thread.


No specific advice was sought. A claim for ESA was made but was refused by the DWP Decision maker due to the level of capital held - £55,000.
When asking for a review & reasons of that decision, it was pointed out that the capital had come by way of two insurance policies (two old endowments) with the intention of repaying the mortgage (interest only) when it became due in a few years time.
The DWP wrote back saying that the decision still remained and that he could pay off the mortgage, but the capital would be calculated as still in existence notionally. To secure an income they had to start using the capital to live off.


That's it - the full story.


The full facts were put to the DWP and they chose to say that it was not exempt capital. There was little else that could have been done. I think that he covered all bases and certainly covered what you have said.

lighting_up_the_chalice

benniebert wrote: »

Thanks, but I still don't see the fairness in it all. The alternative is to sell up and buy another property outright and in doing so not only will the means tested benefits start up again, but that they will own a home of their own. Much cheaper and less hassle if they could have settled the mortgage on the old house.

Cheaper and less hassle for who? Certainly not the state, and they make the rules.

GirlFromMars_2

benniebert wrote: »

Point noted - this is my last post on this thread.


No specific advice was sought. A claim for ESA was made but was refused by the DWP Decision maker due to the level of capital held - £55,000.
When asking for a review & reasons of that decision, it was pointed out that the capital had come by way of two insurance policies (two old endowments) with the intention of repaying the mortgage (interest only) when it became due in a few years time.
The DWP wrote back saying that the decision still remained and that he could pay off the mortgage, but the capital would be calculated as still in existence notionally. To secure an income they had to start using the capital to live off.


That's it - the full story.


The full facts were put to the DWP and they chose to say that it was not exempt capital. There was little else that could have been done. I think that he covered all bases and certainly covered what you have said.

I still think that's a very different way of presenting the story to the DWP than writing to them in advance to ask for advice.

And as "they" had already been refused ESA, had the capital and hadn't actually paid off the mortgage with a subsequent decision to pay the mortgage could easily be looked at as a way of increasing benefit entitlement instead of securing their home.

My advice is still to get written advice in advance from a Decision Maker.