Mortgage needed for Income Support recipient

swanny65

A friend has asked me to help her out. She wants to move from her 3 bedroom terraced house to a 3 bedroom ex - council house. She owns her current home outright and has sold it for £120000.00. The move will be funded by a small £15000.00 mortgage to pay for legal costs, estate agents fees and replacement windows and doors for the new home. Nothing appears excessive to me. She hopes to return to work in 18 months when her youngest starts school and will then claim WTC.

The DWP, Income Support Mortgage team at her local office have said she is not eligable for any help with her housing costs - not an essential move as she is moving from 3 bedroom property to another 3 bedroom property.

To make matters worse her financial adviser, a local estate agent based advisor, says the best mortgage deal he can arrange is a repayment loan of 11% over 25 years with repayments of £160.00 pcm.

Surely this cant be correct. She should be able to get a better mortgage deal than this. After all she is covering nearly all the financial risk by putting down over 85% of the capital towards the new property?

Any comments appreciated. Does anyone know a national IFA who may be able to arrange a mortgage at a relatively low cost.

Thanks

Fran

Has she now also got capital? It could affect her Income Support claim (and Council Tax Benefit?) if she has.

From Citizens Advice - Adviceguide

How much Income Support can you get
Your capital
If you have more than £16,000 in capital you cannot get Income Support.

Capital means anything that could provide you with a source of income. It includes savings, property and land (but not personal possessions or the home where you live).

Capital of more than £6,000 will affect how much Income Support you get. You will be treated as getting £1 a week in income for every £250 of capital (or part of £250) above the £6,000 limit. This is regardless of how much money you actually receive from your capital, if any.

swanny65

No capital.

The £120000.00 value of her home will be put completely into her new home.

cattie

Main stream mortgage lenders will not consider income support for income purposes, so unless she has any other non means tested benefits or income, then she isn't going to find any kind of competitive rate.

Also, it's practically impossible to find a mortgage of such a low amount as £15k. £30k is the mininum that many lenders will give consideration to, so this decreases her options even further.

dmg24

The DWP, Income Support Mortgage team at her local office have said she is not eligable for any help with her housing costs - not an essential move as she is moving from 3 bedroom property to another 3 bedroom property.

I can't believe someone would even dare to ask the question!

swanny65

dmg24 wrote: »

I can't believe someone would even dare to ask the question!

But it's OK for a person with a £100000.00 mortgage to be paid the interest on their loan if they need Income Support?

I was after some constructive help for a friend not opinions, kindly dont post on this thread if you have nothing constructive to add.

Thanks

MortgageMamma

there is a solution

there is one lender who will accept an application off someone who is moving, on the basis that they have received income support for mortgage relief in the last 12 months (most lenders won't touch if claimed within 12 months), but the person has to be employed or Self Employed and made the last payment on the mortgage by themselves with no assistance from the state.

Could this not work for you? I am unsure what the companies minimum mortgage policy is, but I'll tell you the lender for free, its First National.

From my extensive knowledge I cannot think of another lender who will do this.

krisskross

swanny65 wrote: »

But it's OK for a person with a £100000.00 mortgage to be paid the interest on their loan if they need Income Support?

I was after some constructive help for a friend not opinions, kindly dont post on this thread if you have nothing constructive to add.

Thanks

But surely everyone can see that if you have a house with no mortgage then you take on debt to move plus a mortgage it cannot be expected that the tax payers will fund it.

It would have been better if your friend had made the enquiries about help with a mortgage before she sold.

MortgageMamma

krisskross wrote: »

But surely everyone can see that if you have a house with no mortgage then you take on debt to move plus a mortgage it cannot be expected that the tax payers will fund it.

It would have been better if your friend had made the enquiries about help with a mortgage before she sold.

Is that a flower on your avatar or a slice of red cabbage?

krisskross

MortgageMamma wrote: »

Is that a flower on your avatar or a slice of red cabbage?

lol. think it is a petunia type flower.

MortgageMamma

krisskross wrote: »

lol. think it is a petunia type flower.

Amazing thing perception isnt it!

MM