Equity release & UC

NedS

tifo said:

NedS said:

If the property did not fall to be disregard (for example, as a second home), then any loans secured against the property would be taken into account when calculating the capital value for UC.

That said, once the equity release is received, it must be declared, and then consideration can be given by a Decision Maker as per the guidance you posted above.

I didn't think they took this kind of debt into account which is what the equity loan is, a debt secured against the home equity and repayable upon death. That's why to me it seems the same as a mortgage which is also a debt secured against the home and repayable over a time period.

When you have capital then that's yours, you don't need to repay it back to someone so it will be used in UC calculations.

The capital from equity release is available to the claimant to spend how they see fit. If they retain it as capital then it must be declared and taken into account, either as capital reducing any entitlement to UC, or disregarded by a Decision Maker where it is "to be used for making essential repairs or alterations to premises occupied or intended to be occupied as the person’s home" as highlighted above by @calcotti

The claimant cannot be penalised for repayment of debt, so they could choose to repay the loan and not fall foul of deprivation of capital rules, but as long as they have access to the capital, it will be treated as capital regardless of how it was obtained.

To view it another way - if I have £10k in capital and I have a £7k credit card debt, how much capital do I have? I have £10k. The debt is not relevant and is not given any considering when calculating how much capital I have for UC. I can choose to pay off the £7k debt, and if I were to do so I would then have £3k of capital remaining.