DWP Help with Mortgage Interest

Danday

Xbigman wrote: »

Parents willing to sacrifice to stop their sick child going into debt 'adds up' just fine for those of us with a heart.



Darren

I agree, but just wondering why this had not been happening before the change to a loan system

Danday

Cheeky_Monkey wrote: »

It seems to me that the 89% of claimants were more than happy to take the 'free' money but now that it will have to be paid back, it's a lot less appealing

That is what I believe. To be honest if it's the difference between claiming the new loan system or having the house repossessed I know what I would be doing.
I really do wonder actually how many people have been playing the system and having the DWP pay the interest when it wasn't needed. I know I would if I had a £150,000 mortgage and the bank was charging me 1.15% whereas the DWP were shelling out at the rate of 2.61%
The difference being used as a capital repayment is £2190 a year free money

Danday

Xbigman wrote: »

Every time there is a benefit change a high proportion of claimants let the old benefit run out before putting their new claim in. The 89% figure is a bit higher than usual because, as explained in post #3, some claiments would rather owe the mortgage company than the Govt.

Non story IMO.


Darren

Do they? The take up of PIP on conversion from DLA was just as bad? I assume that those who were claiming IB took a long time to think if they wanted to move to ESA?

So you are suggesting that banks will agree to forego any interest payments and just let the amount roll up? I presume that they would still carry on paying the capital back though?

bigbill

If you have Housing Benefit help now YOUR NEXT and may well have to pay it all back in the future if the Tories get away with this one its could just be the start of a loan system for possibly all benefits in the future?

WhenIam64

Parents willing to sacrifice to stop their sick child going into debt 'adds up' just fine for those of us with a heart.

Will admit that some clients have an issue with understanding what is happening with this - but it is explained in #3

"Debts" are not increasing - what is happening is that the capital/equity in the home is not increasing or is being run down to the level where the LTV ratio requires either payments or repossession.

When house prices in the south east are increasing by 10% per year and mortgage interest (not paid/rolled up) is 3% a year then people getting this benefit are being subsidised by those who are in work and have a mortgage. It could be argued that it has been discriminatory to those not in receipt of this benefit.

However homes (which are capital in the same way as a bank account) are seem as somehow different in peoples' mind and want it to be treated as different - though the government does not agree. After all most people never see the capital they have built up in their homes as it tends to end up with the kids as part of their estate.

While interest rates are low and house price inflation is high, this won't trigger repossessions. But when it turns the other way, it could be an issue.

Just not now.

borkid

Danday wrote: »

I agree, but just wondering why this had not been happening before the change to a loan system

I don't really what to go into details but we now have a change of circumstance and also before we were helping our son who had changed jobs to another city and was paying mortgage and rent until his house sold.

It's not as if she doesn't want to work but she just isn't able ESA support group. She doesn't claim some things she might PIP because she can manage without by taking in a lodger (DWP knows). the amout they have paid out in interest is far less than they would have paid in rent for a room in a house.

How about looking at it like this. This is an interest free loan payable on selling the house ( there is already another charge as well as the mortgage on it ) or from her future inheritance.
Ther are many others groups that need looking into before why family haven't paid the interest on there ADULT childrens mortgage when the children are chronically ill but are now prepared to go without something to enable them not to get into further debt.

jekyl4

I currently get SMI, but with it going to a variable rate loan it is not something I want to risk. I would rather owe my mortgage lender more at a fixed rate which I can budget for.

I may be misunderstanding the whole SMI thing. Are these SMI loans realistically a help or just debt in another form? I would like to try to keep my finances as simple as possible!

parkrunner

For me it's like any other benefit. Many people will claim everything they are legally entitled to regardless as to whether they actually need it or not. I don't blame the claimants as frankly I'd do the same, maybe the government has realised this and are doing something about it where possible.

Danday

WhenIam64 wrote: »

"Debts" are not increasing - what is happening is that the capital/equity in the home is not increasing or is being run down to the level where the LTV ratio requires either payments or repossession.

When house prices in the south east are increasing by 10% per year and mortgage interest (not paid/rolled up) is 3% a year then people getting this benefit are being subsidised by those who are in work and have a mortgage. It could be argued that it has been discriminatory to those not in receipt of this benefit.

However homes (which are capital in the same way as a bank account) are seem as somehow different in peoples' mind and want it to be treated as different - though the government does not agree. After all most people never see the capital they have built up in their homes as it tends to end up with the kids as part of their estate.

While interest rates are low and house price inflation is high, this won't trigger repossessions. But when it turns the other way, it could be an issue.

Just not now.

I'm not disagreeing with you but am I getting this right that banks would not push for a repossession order unless the LTV increases beyond what they would accept? For me to understand this say someone has a home that is worth say £450,000, the average round here for the type, and that there is a small mortgage of say £20,000. If this was me and I stopped paying the mortgage the bank could not force the issue? At what point, LTV, do you think a bank would force legal proceedings.
As to why people see equity as different to cash in the bank it all depends on their intentions for the home and for benefit purposes, the DWP cannot treat the equity as available capital so continue to claim a means tested benefit as I do.

WhenIam64

@Danday. The best place to go to understand what the intent was for such a change is the Impact Assessments that are given to the HoC.

Have a look here https://www.parliament.uk/documents/impact-assessments/IA15-006D.pdf

The legislation does not always match the IA but it will be close. Search for "repossessions".

A key phrase is "..the benefit will be financed in a more sustainable and equitable way". The word 'equitable' has a specific legal meaning. It is possible, they made this change under threat of a legal challenge.