They can't be.....can they?

Typhoon2000

borkid wrote: »

In many cases it doesn't cover the whole of the interest either. It depends on the interest rate you are paying. The government use the same interest rate for everyone.

So if you are lucky to be on a low interest rate you get some capital paid off too?

parkrunner

iammumtoone wrote: »

Now.

What if a government in future decides it is short of money so changes the terms to call in all these loans immediately.

You could of course say that about anything. What if tomorrow the government decides income tax rates will rise by 50%, it simply wouldn't happen, a government doing that would fall.

parkrunner

Red-Squirrel wrote: »

You'd be better off selling up, going into rented, and claiming housing benefit that you don't have to pay back ever.

I really don't trust the government as a provider of loans I'm afraid.

No you wouldn't. If there is equity in the property you would have too much in savings for HB once the property is sold. You'd have no long term security in renting privately and with the shortage of council housing that would be the most likely route. You would also be missing out on the year on year in the increase of the value of your home. By accepting the new loan system you have security for life.

Also for those unemployed and claiming the new allowance loan probably the majority would get re-employed making selling the property daft.

moneyistooshorttomention

parkrunner wrote: »

You could of course say that about anything. What if tomorrow the government decides income tax rates will rise by 50%, it simply wouldn't happen, a government doing that would fall.

"In our dreams" I think would be the appropriate phrase to use here.

If businesses can and do find loans being called in sharpish sometimes - when they havent done a thing wrong - then there's no reason that might not happen to private households and with the lender having been the Government.

Who'd a thunk the Government (of whichever Party) would do all sorts that they have done? - and they got away with it (ie the Government didnt fall). It's astonishing just how far the British people can be pushed before they start pushing back imo...

borkid

Typhoon2000 wrote: »

So if you are lucky to be on a low interest rate you get some capital paid off too?

Yes, but I think there are more people who pay some of the interest than not ( this is a memory from a report I read a few years ago). You also have to remember it will be difficult, if not impossible, to change to a lower rate of interest if you are on benefits.

Red-Squirrel_2

iammumtoone wrote: »

True but there does seems to be a loophole that needed to be closed. Its like all of these things originally put in place to help those as you describe above but then taken advantage of by others who don't necessarily need it so gets stopped for everyone.

I don't really mind that, I think its better for a few to take advantage than for genuine people to not get help they need. It happens with every benefit, but its not a huuuuge problem like some make out.

Red-Squirrel_2

parkrunner wrote: »

Also for those unemployed and claiming the new allowance loan probably the majority would get re-employed making selling the property daft.

I was thinking more of people who are not likely to be able to find work again, for a long period or possibly forever. The policy doesn't seem to differentiate between unemployed and unable to work at all.

patman99

Under the current rules, the Govt. Will pay your interest based on a standard Apr of 8%.
A couple of years ago, I found myself having to claim SMI. The APR on my mortgage was 0.66% with the actual interest part of my mortgage payment being £11.89.

The SMI was calculated at the 8% rate, so I would have been paid £104 per month.

So, they would have paid over £90 per month of my capitol. Luckily, I found employment before the benefit kicked in.

borkid

patman99 wrote: »

Under the current rules, the Govt. Will pay your interest based on a standard Apr of 8%.
A couple of years ago, I found myself having to claim SMI. The APR on my mortgage was 0.66% with the actual interest part of my mortgage payment being £11.89.

The SMI was calculated at the 8% rate, so I would have been paid £104 per month.

So, they would have paid over £90 per month of my capitol. Luckily, I found employment before the benefit kicked in.

That was quite a while ago I think. Last I heard it was somewhere around 3.6% and have not heard of a change since. I will add I'm going back about 8years and only know because we are guarantors for my daughter who claims ESA. I think at the time the lowest interets rate she could get was higher than the one the government calculated SMI on. If she stayed on her standard rate she would have been paying nearly half the interest as well as the capital.

Keep_pedalling

iammumtoone wrote: »

So why not make rent paid by the government a loan as well?

The interest only does just that enables someone to keep the roof over their head without the bank repossessing it. It does not pay anything toward the house itself (capital).

The big difference is that the mortgage interest loan is secured, there is nothing to secure housing benefit against.