Mortgage needed for Income Support recipient

swanny65

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.

I agree entirely but she didn't tell me until our children met up at school this week.

I do accept tax payers should not be expected to fund the debt. However there are other reasons behind the move. I have seen enough allowed DWP mortgage interest claims that were quite clearly only set up in the first place with the sole intention of getting the DWP to pay the loan for the longer term. They are normally made by extended families living in the same home selling the property to each other when one member of the family is likely to claim benefits for a long time. eg parents buying their childrens property, then going long term sick and not declaring their children remain in the household. This is because the customers know the DWP will pay the loan up to £100000.00.

My friend can try to get round the problem by selling a percentage share of the new home to a unrelated third party eg myself, and the third party drawing up a rental agreement, similar to a shared ownership scheme, to allow a Housing Benefit claim to made to cover the third parties investment. This would probably be allowed if the reasons to move were accepted.

Rikki

With a new income support claim I believe you have to wait 39 weeks before mortgage interest payments are made.

terese

swanny65 wrote: »

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. .

why would someone in a good state of mind wanna do this?

A_Nice_Englishman

£15,000 sounds a lot for estate agents' and solicitors' fees and new windows.

Could she borrow what ever she needs for the fees and wait for the house improvements?

Fran

swanny65 wrote: »

My friend can try to get round the problem by selling a percentage share of the new home to a unrelated third party eg myself, and the third party drawing up a rental agreement, similar to a shared ownership scheme, to allow a Housing Benefit claim to made to cover the third parties investment. This would probably be allowed if the reasons to move were accepted.

Income Support already presumably know that she owns her property outright. It will ring loud bells if she makes a move like this and could jeopardise any benefit claims she has.

What are the "reasons" for the move?

swanny65

In answer to the last 4 posts:
1. Thanks i was aware of the 39 week rule but it will be irrelevant in this case, as there is no mortgage interest help available.
2. The ex-council house is in an area that has just been by passed by a new road. It is a lot quieter and safer for her children. It is also not a "bad" council built area.
3. I thought £15000.00 a bit steep, i thought about £10000.00, but I am assured it is correct. It does include new doors as well.
4. The shared ownership idea wont ring any bells with Income Support as they wont be asked to help. It might ring bells at the local council when a HB claim is made but unless it breaks their entitlement conditions, i am confidnet, she would be eligable for HB. I believe all she would need to show the move was necessary and it is a commerical arrangement. The move is needed, please note i know not all these are requirements for a benefit claim, as the new property is; bigger, the old property is in need of improvement, its in a safer area, nearer to the school, and away from her ex who has moved in with a new woman down the road. Like i have said not all essential I know.

However it would appear getting her own loan at a reasonable rate to pay herself will be difficult. I have obtained details of a local broker from another friend who has used them. May be he will be able able to better the 11% loan she has been offered to date.

Debs12

I had a thought why Mortgage?
If it is for new windows and fees and so on why not go for a cheap loan for £15K?
Secured or unsecured?

Try AA loans or Lloyds TSB?

swanny65

Thanks Debs12

The two you mention wont allow her the loan but i seached other providers and it appears she could lower her original quote from £160.00 pcm to about £140.00 pcm with a 20 year secured loan

swanny65

Just taked to very helpful A&L advisor - you cant have a secured loan without a mortgage. Bizarre as she has 120000 equity but its the law.

I give up......

A_Nice_Englishman

Only granting secured loans if the property is already mortgaged may be A&L policy but I don't think it's the law. Perhaps the A&L advisor is poorly trained.
For example, http://www.moneysupermarket.com/loans/securedloansguide.asp says

A secured loan is any loan that requires the borrower to provide the lender with some form of security. In the case of secured loans, the security will be the borrower's property, regardless of whether it is mortgaged or owned outright. Loans secured against property that is already mortgaged are known as second charges, whereas loans secured against a property owned outright with no existing mortgage in place are known as first charges. See below for a quick guide to secured loans.