Support for Mortgage Interest

bobbidyboo

My self employed income has gone down since the pandemic & I can no longer afford my mortgage and survive at the same time. I've looked into selling my home but have not found any buyers at any price that would pay back the mortgage. 

I've looked into renting out my home & sleeping in a tent myself, but after tax the rent wouldn't cover the mortgage either (it would just cover it before tax, but that is useless since I have to pay tax). I used to earn a lot & have paid hundreds of thousands in tax over the years but sadly now that I've lost everything, I'm starting to feel a little abandoned by the same government I funded so much NI to protect people from this type of situation.

I've already taken out the maximum 6 month mortgage holiday while searching for buyers for my home, and the mortgage lender won't help any more.

Since I can't sell or rent it out, I'm now looking into SMI (support for mortgage interest), but I'm a little confounded by it. It seems they expect you to pay the mortgage capital, but you only qualify for mortgage interest help if you can't afford to pay the capital. It's a bit like the chicken and egg scenario. Have I misunderstood the SMI guidance? 
https://www.gov.uk/support-for-mortgage-interest

I also do not qualify for job seeker's since my income is not zero, it's simply not enough to cover the mortgage. I've also looked into getting lodgers but can't find any in this area due to not being convenient for public transport. The income from lodgers after tax, repairs & lodger bills, wouldn't be enough to cover the mortgage either (rental yield here is low).

I have no family or friends who can help. Feeling quite alone in all this. Is there any financial support out there for someone in this predicament?

KatrinaWaves

SMI is for mortgage interest, clue is in the name, and will only be awarded after 9 months of no income on UC. The govt expects homeowners to have savings to help cover these expenses. I’ve you have indeed paid ‘hundreds of thousands’ in tax over the years, then you have earned many more hundreds of thousands than that, so you should have had some savings to fall back on? Unless you are
speaking hyperbolically, and well, tax isn’t a piggy bank.

You need to look at alternative income. Have you looked at getting employment alongside your self employment to supplement whilst your work is low? Did you qualify for any SEISS grants? Have you looked at downsizing your home (with you having space for lodgers) 

edit: have you sold your home? You say you are busy as moving home in a post made two days ago?

and in this post made recently you have housemates? https://forums.moneysavingexpert.com/discussion/6207648/gym-didnt-cancel-my-membership-refusing-to-back-date-refund/p1

Have you just made all this up? Please state your current situation accurately. 

bobbidyboo

KatrinaWaves said:

SMI is for mortgage interest, clue is in the name, 

Clue is in the thread title, "support for mortgage interest", I'm aware it's for mortgage interest. 

KatrinaWaves said:

... and will only be awarded after 9 months of no income on UC. 

Hence my post about the chicken & the egg. If you have no income then you'd not have a house since it would have been repossessed, hence the SMI can't be awarded anyway. Mortgage companies don't generally wait around for 9 months without payments. Did you read my post? 

KatrinaWaves said:

I’ve you have indeed paid ‘hundreds of thousands’ in tax over the years, then you have earned many more hundreds of thousands than that, so you should have had some savings to fall back on? 

I did indeed, and they've been wiped out by various crises', the latest being the coronavirus.

KatrinaWaves said:

Unless you are
speaking hyperbolically, and well, tax isn’t a piggy bank.

I'm not speaking hyperbolically, and true that tax isn't a piggy bank, but it also isn't a means for the government to take essential earnings and not give back in terms of services such as health care or police protection that your tax should pay for, and then leave you unable to pay your mortgage as a direct result, but that's going off the point.

KatrinaWaves said:

You need to look at alternative income. Have you looked at getting employment alongside your self employment to supplement whilst your work is low? 

I did not say my work was low, I said my income has gone down. The two do not necessarily go hand in hand. Not all self employed work in the service sector. I still work very long hours & earn more than any minimum wage job would pay me, but I no longer earn enough to pay my mortgage. I do not qualify for any employed job that would pay more despite being at a reduced earning rate, since I've been self employed almost all of my working life. I cannot work an extra job since I already work every waking hour aside from when I'm eating (and often even then too!).

KatrinaWaves said:

Have you looked at downsizing your home (with you having space for lodgers) 

I'm starting to think you haven't read my post. I have indeed looked at downsizing, but can't find any buyers hence why I'm in this situation and why my savings are drained.

KatrinaWaves said:

and in this post made recently you have housemates? https://forums.moneysavingexpert.com/discussion/6207648/gym-didnt-cancel-my-membership-refusing-to-back-date-refund/p1

Have you just made all this up? Please state your current situation accurately. 

Are you actually trying to help me or catch me out? I did have housemates at one point, and I did find a buyer so was moving home, but that fell through. It is proving very difficult to find another. What I'm looking for is advice regarding the SMI. It seems you only qualify for support for mortgage interest if you can afford to pay your mortgage for 9 months & are on UC. However, I wouldn't qualify for UC if I had enough savings to pay my mortgage for a further 9 months and if I did qualify for UC would have been repossessed in 9 months of not paying, thus not requiring SMI in the first place. There must also be plenty of people who lose their jobs & income entirely, and can't sell their homes within a reasonable period of time.

calcotti

OP, the SMI scheme is, as you have identified, a ludicrous scheme. There are very few people who would be able to sustain a mortgage if they have no earnings coming in. Even if they had SMI this would not help much if it is a repayment mortgage. 

Unfortunately you have understood the rules correctly and SMI isn't going to help you.

Spoonie_Turtle

The rules are the rules. I don't know the reality of how mortgages work, but for SMI you have to have been claiming a relevant benefit with zero income. People claiming UC can have up to £16000 in savings, so if they have a mortgage of £1000 a month, they can have enough savings to pay for 16 months. If their mortgage is £2000 a month, they can have enough to pay for 8 months, and so on. 

Don't forget the benefits system was not designed for the current situation. It was designed for normal times, assuming that someone needing to downsize had a reasonable chance of selling, or getting a lodger who can afford to run a car if there's not public transport nearby. It wasn't designed for huge parts of the population losing their income all at once.

Regarding your work situation, I am sure you must be employable if you have managed to support yourself through self-employment for all these years. If there is no welfare help available, your only option may be to pause self-employment and find a different job. Yes I did read your post, but I think your work history may not be the obstacle you think it is, especially for some of the essential jobs that are currently going.

Also, my apologies if this is a really obvious question, but have you thought about ways to cut down your regular outgoings? I don't just mean food, but going through utilities and all of your other bills, whether you can reduce them or even eliminate them entirely for now. Of course some things are not necessary for survival (e.g. TV licence or streaming subscription) but can be essential for wellbeing so it is always an individual decision what's worth it and what's not. And depending on what type of work you do and whether it's likely to pick back up within the year, it might be that you can identify things you can do without for a few months while things are tight. If you've already considered everything then my apologies, but it can be an easy thing to overlook while our focus is on trying to make sense of benefits!

bobbidyboo

calcotti said:

OP, the SMI scheme is, as you have identified, a ludicrous scheme. There are very few people who would be able to sustain a mortgage if they have no earnings coming in. Even if they had SMI this would not help much if it is a repayment mortgage. 

Unfortunately you have understood the rules correctly and SMI isn't going to help you.

Thank you calcotti, your post makes sense (unfortunately). I've thanked your post. Try telling the above to @KatrinaWaves ! 

Spoonie_Turtle said:

If their mortgage is £2000 a month, they can have enough to pay for 8 months, and so on. 

True, but SMI requires you to have enough for 9 months - and if you have enough for 9 months you don't qualify for SMI. Chicken & Egg.

Spoonie_Turtle said:

Don't forget the benefits system was not designed for the current situation. It was designed for normal times, assuming that someone needing to downsize had a reasonable chance of selling, 

I think there are plenty of times where people lose their income or have reduced income, need to sell & can't find a buyer in time. I don't think the system is only failing because of the current situation.
 Spoonie_Turtle said:

Regarding your work situation, I am sure you must be employable if you have managed to support yourself through self-employment for all these years. If there is no welfare help available, your only option may be to pause self-employment and find a different job. Yes I did read your post, 

Are you sure? Because I said in my post that I am employable, but can't get a job that pays more than I currently earn through self employment. I work in online entertainment running my own business earning a decent salary & before that was a coffee shop worker when I was a student decades ago. The only industry I would qualify for outside my business would be a cafe worker. There is nothing in entertainment that you can get hired for quickly or that would pay more than I currently earn. I still earn a lot but my mortgage is now higher than income & my house is falling apart, so it's everything all at the same time. People think if you earn a lot that means you're rich but don't understand why at my salary I'm having to scrounge food from local supermarkets at closing time when they're throwing things out, yet still unable to pay my mortgage. Often people over-simplify and think earning a lot = comfortable. They can't understand it's possible to have higher commitments than even a higher income & be unable to get out of those commitments. If I was living in a tent it would be an upgrade.

Spoonie_Turtle said:

Also, my apologies if this is a really obvious question, but have you thought about ways to cut down your regular outgoings? I don't just mean food, but going through utilities and all of your other bills, whether you can reduce them or even eliminate them entirely for now. 

I've eliminated a lot of food cost by getting food being thrown out by supermarkets at end of day. I don't use central heating because I can't afford the gas & my boiler is literally at the end of its life- had to fix it myself last month using google! I have tried to cut down on electricity but unfortunately it's what keeps my business going. Also, being uncomfortable, cold & hungry has actually had perhaps more negative impact on income than the savings it produces, ironically. I can't stop council tax. I've stopped all house maintenance (which was a huge monthly bill) and as a result it's becoming dilapidated quickly. Had to learn to DIY everything that breaks which unfortunately takes away from my earning time even more. I'm selling everything I own online, but the time to create the listings & answer questions, postage, and the difference between price originally paid & price sold for is so huge that you end up earning almost nothing from that anyway. Tried to get rid of car but in this area depend on it for so many essentials related to life, wellbeing & business. Wouldn't even be able to post anything without it- I don't have a printer.

I see people who are earning a fraction of what I earn, but with no significant commitments they can't escape from, living comparably luxurious lifestyles by the standards I've had to become used to, yet complaining about their lives. 

KatrinaWaves

I know you dont seem to like what I am saying, but you say you are still earning a lot of money, yet cannot afford your mortgage. Benefits are not designed to pay super high mortgages for people, so if your mortgage cost is so high it outweighs your 'high income' then benefits have never been designed to pay for that level of outgoings. 

Your house was sold a couple of weeks back, so you clearly can find buyers, so get it back on the market, reduce the price to take into account the dilapidations and try and get some more housemates temporarily, as you managed to get those before as well. Im assuming with you being such a high earner you have some equity so can hopefully downsize to something more appropriate and in better condition. You cant go on spending your high salary on some of your mortgage and leaving yourself nothing for food and warmth. Benefits cannot help people with high salaries like yourself. It is simply a case of you have to sell your home as you can no longer afford it, and likely havent been able to afford it for a while...

calcotti

bobbidyboo said:... living comparably luxurious lifestyles by the standards I've had to become used to, yet complaining about their lives. 

That's how capitalism works, making people want more so that they consume more - however that's a discussion topic and therefore off topic for a support forum.

Spoonie_Turtle

Long posts, can't quite address everything, but yes it seems benefits cannot help you with your current situation.  Of course the pandemic is not the only reason it's far from a perfect system, but it is a major reason why that's being highlighted so sharply right now.  I am assuming you didn't qualify for any of the SEISS - it's clear your income has been adversely impacted but I know there are literally millions of people who have been excluded for one reason or another  

Often people over-simplify and think earning a lot = comfortable. They can't understand it's possible to have higher commitments than even a higher income & be unable to get out of those commitments.

I have to say as someone who has only ever had a low income, it can be hard to fathom very high outgoings.  But I've realised that in normal times, it's simply a case that people earning a lot more are living within their means which is absolutely fair enough - what's the point of earning well and not enjoying the things those earnings can buy?!  Unfortunately it means at unexpected times like this, when entire industries have had to stop, the support that's on offer is still only to cover the basics of living, which is an entire world away.
All this to say, in case it wasn't clear, although I can't fully understand, I do see that it is certainly possible to be struggling on what is still a relatively high salary.

bobbidyboo

KatrinaWaves said:

I know you dont seem to like what I am saying, but you say you are still earning a lot of money, yet cannot afford your mortgage. 

Glad you finally understand.

Spoonie_Turtle said:

it's simply a case that people earning a lot more are living within their means which is absolutely fair enough - what's the point of earning well and not enjoying the things those earnings can buy?!  

Exactly and that's my point- I earn relatively well but cannot enjoy it because I can't escape prior commitments & can't find a buyer.

Spoonie_Turtle said:

the support that's on offer is still only to cover the basics of living, which is an entire world away.
All this to say, in case it wasn't clear, although I can't fully understand, I do see that it is certainly possible to be struggling on what is still a relatively high salary.

In my case it won't even cover the basics of living. I don't remember the last time I slept in a bed or had a working kitchen or a bathroom. I have to wee in the sink, eat cold food thrown out of the supermarket, and live out of a plastic bag. A tent would be an upgrade as at least I'd have fresh air.
I'm not struggling, I'm very fast approaching doom. I wish it was just a temporary struggle ! Can't see light at end of tunnel at this rate. Problem is bankruptcy would only worsen my situation.
Sad part is if I was to go back in time & repeat all of this, I can't identify anything I did wrong. 

KatrinaWaves

You say you were looking into renting it out or getting housemates 'but the rent wouldnt cover the mortgage', how can you do that if you have no working bathroom or kitchen? 

You are in negative equity, your house is almost derelict despite you earning a good wage. Your other posts speak about how you suffer from depression. It appears your situation is untenable and the government is not there to bail people out when they have earned a good wage yet failed to secure a warm secure roof over their head because of whatever reasons you have been through.
How would bankruptcy make it worse? Can it get worse than what you describe?