Borrowing while on benefits. Is this allowed?

alano1963

I am on income related ESA and want to take out a home improvement loan. Will this amount be counted as capital when I get it? I can't afford to do the repairs and updates without getting a loan as I am disabled, but will they expect me to live off that money instead of getting the work done? I am so worried about this (I have PTSD and this is making me even more ill!) I want to borrow £15000 and the bank is happy to give me it but I am too worried to take it. I have searched the internet but I can't find any rules about this anywhere. Does anyone know anything about this issue please?

pmlindyloo

Are you on contribution based ESA or income based?

If you are on contribution based ESA then this loan will have no effect as contribution based ESA is not means tested.

Are you on any other benefits?

alano1963

I am on income related ESA and DLA and family tax credit.

cloudydays

The bank is happy to lend £15,000 and you're on a means tested benefit?
Are you sure you can afford the repayments?

merlin68

I'm amazed any bank would lend to someone on benefits. Thought their lending criteria had been tightened up.
I wouldn't do it.
What would happen if you didn't get pip when your dla is transferred and you have no means of paying it back.
Save up and do it gradually.

Podge52

merlin68 wrote: »

I'm amazed any bank would lend to someone on benefits. Thought their lending criteria had been tightened up.
I wouldn't do it.
What would happen if you didn't get pip when your dla is transferred and you have no means of paying it back.
Save up and do it gradually.

What would happen if you were working and lost your job.

I think the bank would see an ongoing disability benefit as a secure income and I couldn't see the bank offering it they had any doubt about the ability to repay it.

@OP
I think, although others may correct me you are allowed up to 16k in savings so if 15k doesn't take you over this I think you will be ok.

nannytone_2

its 16k before benefit is totally stopped.
it would be reduced by any amount over 6k.
and unless the home improvements are deemed absolutely necessary, the OP could fall foul of the deprivation of capital rules.

is there no way that money could be released directly to the tradesperson without having to go through the OP's account?

Podge52

Your right Nanny my mistake, although I doubt the deprivation rule would apply if it were under 16k.

nannytone_2

i wouldn't want to risk it

HappyMJ

alano1963 wrote: »

I am on income related ESA and want to take out a home improvement loan. Will this amount be counted as capital when I get it? I can't afford to do the repairs and updates without getting a loan as I am disabled, but will they expect me to live off that money instead of getting the work done? I am so worried about this (I have PTSD and this is making me even more ill!) I want to borrow £15000 and the bank is happy to give me it but I am too worried to take it. I have searched the internet but I can't find any rules about this anywhere. Does anyone know anything about this issue please?

I have a £15,000 loan. The repayments are around £300 per month over 5 years. That's quite a large amount to pay from a very limited income.

It will affect your benefits in the short term but you are allowed to spend capital on essential expenditure without being accused of depriving yourself of capital so it shouldn't affect you for very long.

alano1963

I am disabled not unemployed. My disability payment is enough to pay the repayments. I am not worried about that but what I cant do is pay it all out in one go (because I am on benefits and have no savings). We don't drink and don't smoke or anything like that so we can cover our payments. I can afford to borrow money to fix our wrecked house but I'm not going to get into debt if there is no point. I am ill enough without having the worry of the debt for no reason. I just want to know if I will get in trouble or penalised for the few days the money is at £15000 in the bank. Please don't discriminate against me. I have worked all my life until now but now I can't. If I were unemployed I would wait till I got a job but my disability will not ever go away so I can never ever do the repairs to my home without borrowing. I just want to know if its allowed or will they say it is savings and take it (bit by bit) off me so I won't get the repairs and will be left 15000 in debt for nothing.