MSE News: Warning - if the state helps pay your...

Former_MSE_Callum

More than 90% of homeowners who are part of the Support for Mortgage Interest scheme face losing up to £5,000 a year within weeks when the benefit is replaced by a loan - if you're affected, you must act NOW...

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'Warning - if the state helps pay your mortgage interest, act now or it'll be stopped'

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Danday

Thank you for that. Maybe it does take a poster to highlight the major problem that exists. seems also that some posters are suggesting that if you have a small mortgage compared to the equity then you don't really need to make any payments to the bank. That is something I doubt is good advice.

Anyhow so glad that you have taken on this growing problems that I highlighted.

[Deleted User]

Whenever their is a major change in a benefit it usually takes a while for people to get upto speed, I remain convinced that the 90% figure will plummet like a stone in the next few weeks.
But it remains a fact that a number of borrowers on low interest mortgages with low outstanding balances may decide that they don't want a loan from the govt but will find the missing SMI themselves.

Danday

venison wrote: »

Whenever their is a major change in a benefit it usually takes a while for people to get upto speed, I remain convinced that the 90% figure will plummet like a stone in the next few weeks.
But it remains a fact that a number of borrowers on low interest mortgages with low outstanding balances may decide that they don't want a loan from the govt but will find the missing SMI themselves.

We will see. I do remember to great anticipation when Pension Credit came out, the government expected more or less everybody to claim it. It started off slow, then faltered. The government being a little embarrassed paid for adverts in the paper and even had produced TV ads to try to drum up support and get people to claim. They even hit upon the idea of giving money away to people they knew were entitled for 6 months in the hope that these people at the end of 6 months would put a claim in to continue to get the money A complete flop very few signed up at the end of the 6 months. Then that outsources it to AgeUK hoping that they would put the good word out - still there was little interest from the public so the government gave up offering it.. As I have said over £3bn a year goes unclaimed of Pension Credit - a figure that the government never thought would happen.
I do suspect that this SMI loan scheme will go the same way. Like Pension Credit is a means tested benefit, that most pensioners don't want to get involved with, SMI is a second mortgage/charge on their home which will put people off.
Time will tell, but my guess is that less than 50% will sign up leaving slightly over 50% not wanting any part of it. The government are expecting around 13% - they will sadly be way out. I think that if the government offered the loan at 0% then they may well get more takers.

keith1955

There is a factor that nobody is taking into account.
I personally am unable to work, being severely disabled ( due to ongoing problems that occurred whilst serving in the Ambulance Service ), and survive now on benefits alone.
I am loosing £80 per 4 weeks, ( Some people are loosing much much more than that I know ), and somehow have got to find the money to keep my mortgage payments up.
This may not seem much to some people, but £20 a week is a lot to loose, and if I were to have taken the SMI loan, ( which My Wife and I rejected, at a 1.7% starting rate ), over the 7 and a half years we have left on our mortgage, at compound interest rates, and we were told by SERCO that the interest rate WILL go up TWICE each year, then we would have an extra £10K to £12K at least, added to how much we would have to pay, if not more. As whilst you pay the loan back, there is still compound interest being added to it. Also, downsizing, is NOT an option as where we live, smaller properties command a premium, and would cost the same as what we have.
So, we are in our mid 60's. Can't afford to move and can't afford to borrow. Placing us between the devil and the deep blue sea.
Is this fair when people in rented properties are getting so much of their rent paid for them.
What we have worked so hard for all of our lives so as our children would have something after we are gone, it seems, doesn't matter.
Also, SERCO PLC, I would like to point out, is a PRIVATE company and not the Government. So they are the lenders and the ones taking in the profits from it. So I think you will find it is them setting the interest rates and NOT the government. ( They told me this on the phone ).
I feel very sorry for others who are in the same or a worse position than us. But hey, at least there is money for HS2 to save 10 minutes off the journey time.

Danday

keith1955 wrote: »

There is a factor that nobody is taking into account.
I personally am unable to work, being severely disabled ( due to ongoing problems that occurred whilst serving in the Ambulance Service ), and survive now on benefits alone.
I am loosing £80 per 4 weeks, ( Some people are loosing much much more than that I know ), and somehow have got to find the money to keep my mortgage payments up.
This may not seem much to some people, but £20 a week is a lot to loose, and if I were to have taken the SMI loan, ( which My Wife and I rejected, at a 1.7% starting rate ), over the 7 and a half years we have left on our mortgage, at compound interest rates, and we were told by SERCO that the interest rate WILL go up TWICE each year, then we would have an extra £10K to £12K at least, added to how much we would have to pay, if not more. As whilst you pay the loan back, there is still compound interest being added to it. Also, downsizing, is NOT an option as where we live, smaller properties command a premium, and would cost the same as what we have.
So, we are in our mid 60's. Can't afford to move and can't afford to borrow. Placing us between the devil and the deep blue sea.
Is this fair when people in rented properties are getting so much of their rent paid for them.
What we have worked so hard for all of our lives so as our children would have something after we are gone, it seems, doesn't matter.
Also, SERCO PLC, I would like to point out, is a PRIVATE company and not the Government. So they are the lenders and the ones taking in the profits from it. So I think you will find it is them setting the interest rates and NOT the government. ( They told me this on the phone ).
I feel very sorry for others who are in the same or a worse position than us. But hey, at least there is money for HS2 to save 10 minutes off the journey time.

You have highlighted one of the reasons why this loan scheme will fail to attract the 87% that are entitled to have it. Like I said if this was a 0% loan then the government would get their money back and give relief to people like yourself in not having to struggle even more with the lost £20 a week. As you say there is no guarantee that the interest rates won't go up and of course there is the problem of compounding. This scheme has been poorly thought through, there is no need to charge any interest - that is to me just plain and simple greed. The public will see though it and refuse the loan option like you are doing.
To me this stinks of Equity Release by the back door.

parkrunner

keith1955 wrote: »

There is a factor that nobody is taking into account.
I personally am unable to work, being severely disabled ( due to ongoing problems that occurred whilst serving in the Ambulance Service ), and survive now on benefits alone.
I am loosing £80 per 4 weeks, ( Some people are loosing much much more than that I know ), and somehow have got to find the money to keep my mortgage payments up.
This may not seem much to some people, but £20 a week is a lot to loose, and if I were to have taken the SMI loan, ( which My Wife and I rejected, at a 1.7% starting rate ), over the 7 and a half years we have left on our mortgage, at compound interest rates, and we were told by SERCO that the interest rate WILL go up TWICE each year, then we would have an extra £10K to £12K at least, added to how much we would have to pay, if not more. As whilst you pay the loan back, there is still compound interest being added to it. Also, downsizing, is NOT an option as where we live, smaller properties command a premium, and would cost the same as what we have.
So, we are in our mid 60's. Can't afford to move and can't afford to borrow. Placing us between the devil and the deep blue sea.
Is this fair when people in rented properties are getting so much of their rent paid for them.
What we have worked so hard for all of our lives so as our children would have something after we are gone, it seems, doesn't matter.
Also, SERCO PLC, I would like to point out, is a PRIVATE company and not the Government. So they are the lenders and the ones taking in the profits from it. So I think you will find it is them setting the interest rates and NOT the government. ( They told me this on the phone ).
I feel very sorry for others who are in the same or a worse position than us. But hey, at least there is money for HS2 to save 10 minutes off the journey time.

But if it means having your home for life then surely that's better than losing it.

Callum_Jones

I think(hope) its a sign of things to come.
When people pass away after claiming significant amounts in benefits their assets should repay the state, with minimal interest.

I'd go further and let the govt offer an equity release scheme.

Jess8789

Does anyone know if the dates for cessation of payment of SMI benefits set out in Martin Lewis's above article are defiantly correct? I can’t find anything verifying his assertion that payments can be made beyond 5 April, i.e. until 7 May, even if a government Ioan is not applied for.

Martin says that if you do nothing payments will then stop on 7 May, which is a whole month later than the 5 April date the government states and which is the date recited at regulation 19 of the appropriate legislation.

This is of huge importance bcos it means many elderly and disabled people have longer than they were told by the DWP in order to explore alternative options/apply for the loan etc!

However I cannot verify Martin’s information regarding this 7 May date anywhere and the DWP says that all payments stop on 5 April (a date that Martin doesn’t even mention in his article but which is the date in the statute)

Can anyone clarify? Thanks

[Deleted User]

I will add to my earlier comment, I'm surprised that more people didn't see this coming, we did some time back and decided to sell up down size and be mortgage free. The whole idea of SMI becoming a loan has been flagged up for sometime now.

borkid

Callum_Jones wrote: »

I think(hope) its a sign of things to come.
When people pass away after claiming significant amounts in benefits their assets should repay the state, with minimal interest.

I'd go further and let the govt offer an equity release scheme.

So people who work and buy a property then become ill will have to pay back but others who don't make the sacrifice will get it all given to them and not have to pay any back and if in private rented accomodation the taxpayer will be paying off the landlord's mortgage.

I will add I don't claim anything although I have paid in for many years and get a reduced state pension ( I made some provision) but know of people who have had expensive holidays, large families and now claim HB. How is that fair?