morgage question

colin13

my morgage in years is due to end in 3 months time,,i get housing benefit,,morgage is about 10,000 short,,because its an endowment morgage,,will i still get help,,

Caz3121

colin13 wrote: »

my morgage in years is due to end in 3 months time,,i get housing benefit,,morgage is about 10,000 short,,because its an endowment morgage,,will i still get help,,

do you mean you receive SMI or is this a shared ownership and you get help with the rent part from Housing benefit?

colin13

SMI sorry missed that bit

rogerblack

colin13 wrote: »

SMI sorry missed that bit

What happens at the end of the term if you're 10000 short?

colin13

they said they will extend term,,obviously it will be repayment,,although that presents another problem,,,i have ms ,and life insurance will be expensive,,

tomtontom

You don't have to take out life insurance with the mortgage. Whilst it is always a good idea to have it, it is by no means essential.

BigAunty

Not all lenders will extend a mortgage term. There have been cases on the Housing Forum with posters being in a hurry to sell before the end of their mortgage term because, for example, they are retired and have no employment income and no realistic prospect of paying off a large balance and the lender is unlikely to give consent.

Also, you have to consider the risk of the SMI scheme changing drastically in the future (the govt started to make noises along the lines of introducing time limits to all benefit claimants or turning it into a loan that is secured on the property). Not sure what, if any, changes are actually being proposed.

How long are the lender's proposing to extend it by? And can you realistically afford the repayment part should you qualify for the interest only part of SMI.

I don't know whether or not the SMI will continue under an extended mortgage term but other posters will.

Have you considered selling up and moving to a cheaper property so that you own it outright, perhaps with an additional lump sum put by for housing repairs, etc?

You are anxious about the expense of the repayment basis. To help you with affordability calculations, download the MSE budget planner.

pmlindyloo

As well as Big Aunty's good advice about considering selling up then you can read this

https://www.nationaldebtline.org/EW/factsheets/Pages/38%20EW%20Mortgages%20-%20help%20with%20payments/Page-02.aspx#

There is a live web chat that you can use to ask about the re mortgage or give them a call.

bloolagoon

BigAunty wrote: »

Not all lenders will extend a mortgage term. There have been cases on the Housing Forum with posters being in a hurry to sell before the end of their mortgage term because, for example, they are retired and have no employment income and no realistic prospect of paying off a large balance and the lender is unlikely to give consent.

Also, you have to consider the risk of the SMI scheme changing drastically in the future (the govt started to make noises along the lines of introducing time limits to all benefit claimants or turning it into a loan that is secured on the property). Not sure what, if any, changes are actually being proposed.

How long are the lender's proposing to extend it by? And can you realistically afford the repayment part should you qualify for the interest only part of SMI.

I don't know whether or not the SMI will continue under an extended mortgage term but other posters will.

Have you considered selling up and moving to a cheaper property so that you own it outright, perhaps with an additional lump sum put by for housing repairs, etc?

You are anxious about the expense of the repayment basis. To help you with affordability calculations, download the MSE budget planner.

From 2017 it is a loan with interest and charged to the house

silvercar

Endowment mortgage, so either the endowment policy is tied to the mortgage and the achieved sum will go straight to the lender, or the endowment provider will pay you and you need to pay it over. Either way, start the conversation with the endowment provider now. Some of them are very slow at releasing the funds and you don't want any hiccups.

That leaves you with a shortfall.

If you weren't in receipt of means tested benefits, the answer would be to continue with existing mortgage payments, these would be eating into the capital nicely now that the endowment has significantly reduced your mortgage, but that option isn't available to you.

So you will have an existing mortgage with a new end date and a total loan amount of only about £10,000. I expect that SMI would continue but on that amount all it will be would be about £26 a month.

A £10,000 mortgage extension for 5 yrs on a repayment basis at 3% would be £180 a month, 3yrs at 5% would be £300 a month.

The only way I can think that the lender can structure the mortgage loan so that you would continue to receive all the SMI that you get at the moment and utilise the endowment payment to reduce the amount owed at the same time as not effecting your means tested benefits would be if you had an offset mortgage. The endowment payout could then go into the offset but you could elect to keep your payments at the same level. Not all lenders will structure the offset mortgage in this way, though some do. If you are on benefits then I doubt you will be able to move your mortgage to a different lender who has this facility, so it is worth investigating if your current lender offers it and if they will let you make the change in mortgage type.

BigAunty

bloolagoon wrote: »

From 2017 it is a loan with interest and charged to the house

Thanks for confirming, I must have missed the announcement in the Budget and still don't find much information on it. It's apparently a bill that's going through Parliament.

This article indicates it will switch in 2018 (and others say 2018-19) but it's still going to be a close call for the OP to find 10k, plus interest, in 2-3 years on benefits if the bill does go through.

http://www.mortgagefinancegazette.com/arrears/budget-smi-to-become-a-loan-not-a-benefit/

A bit more info here for the OP

http://blog.shelter.org.uk/2015/07/changes-to-support-for-mortgage-interest-mark-fundamental-shift-in-welfare-provision/

http://www.parliament.uk/documents/impact-assessments/IA15-006D.pdf