Buying a new home - does it always affect your benefits?

smcauley

Hi, Can anyone help?
I am emailing on behalf of a friend who is in receipt of Employment Support Allowance and Disability Support Allowance.
He has been paying an interest only mortgage on his house for 10 years now since his circumstances changed and he was unable to work. He never missed a payment on his mortgage but now as the bank want the capital repaid he has to sell his house as he is unable to apply for another mortgage due to not working. He has just received a cash offer on his house and it will be tight but it will leave him with just enough equity (£60000) to hopefully buy a 1 bedroom flat so that at least he has a roof over his head. He has not found a flat to buy yet but has viewed several so hopefully will soon but if he does and the new flat can be bought as part of a chain so that his house sale goes through when the flat he intends to buy goes through and the money doesn’t actually go into his bank account will his benefits still be stopped? Also if he finds a flat after his house sale goes through and the money is in his bank account are there any grace periods offered by the government so that the equity from his house sale will not stop his benefits whilst he is looking for somewhere to buy, as if they do he will not be able to buy as he will have a roof but nothing to live off for 6 months until he is able to re-apply for the benefits.
Any advice would be appreciated. Thanks.

Muttleythefrog

Others with more knowledge will confirm. I understand though that typically if you sell the home you live in then for 6 months (or more if approved due to circumstances such as purchase falling through) that money can be used to purchase a new home without being considered as capital for income related benefits.

smcauley

Thanks so potentially from exchange of contracts on his house he could have 26 weeks or more if they approve an extension to buy somewhere else without both the ESA and DSA being stopped?

nannytone_2

is the cash offer below the market rate for the property?

if so, this could be an issue with regards to capital.

smcauley

The market value of his house was between £120k and £140k but because the bank wanted a quick sale he sold it for £120k.


He's got the mortgage/debts to pay off which total £60k total which would leave him £60k for the flat. As long as he can claim DSA/ESA for upto 26 weeks before buying the new flat he should be ok. I just wanted to see if this was feasible before I raised his hopes and told him to ring up asking about it???

TELLIT01

The 6 months will be from the date he receives the funds, which will be the date of completion of the sale, not the date they exchange contracts. He will need to inform ESA that he has received the money despite the fact that it will be disregarded.

nannytone_2

smcauley wrote: »

The market value of his house was between £120k and £140k but because the bank wanted a quick sale he sold it for £120k.


He's got the mortgage/debts to pay off which total £60k total which would leave him £60k for the flat. As long as he can claim DSA/ESA for upto 26 weeks before buying the new flat he should be ok. I just wanted to see if this was feasible before I raised his hopes and told him to ring up asking about it???

how much are the debts ( not including the outstanding mortgage)

paying off debts before they are due can lead to issues around deprivation of capital