Mortgage Overpayment

rach3920

Hi!

About to migrate to UC from TC. I have over £16k in savings at the moment but this is being used to pay a chunk of my mortgage off when our fixed rate ends in May. Savings will then be below £16k.

Currently self-employed and we plan to overpay our mortgage as much as possible over the next 12 months before our self-employment ends in February 2025. Do UC see this as deprivation of capital? By overpaying this will keep our savings below the threshold but does a mortgage count as reasonable debt to pay off? 

Thanks everyone

HillStreetBlues

rach3920 said:

Hi!

About to migrate to UC from TC. I have over £16k in savings at the moment but this is being used to pay a chunk of my mortgage off when our fixed rate ends in May. Savings will then be below £16k.

Currently self-employed and we plan to overpay our mortgage as much as possible over the next 12 months before our self-employment ends in February 2025. Do UC see this as deprivation of capital? By overpaying this will keep our savings below the threshold but does a mortgage count as reasonable debt to pay off? 

Thanks everyone

Any debt (including a mortgage) is fine to pay off under UC.  Paying off a debt can never be DoC with UC,

peteuk

Under transition protection you £16K savings will be disregarded, for a year.  If during this time you drop below £16K then I believe this will be a change of circumstance and you will loose your TP.  

At this point anything above £6K will have a negative effect on your UC and the amount you get will reduce by £4.35 for every £250.

So whilst paying your mortgage is allowed and wont be classed as deprivation of capital, I would look at the timing of the payment and fully understand what the impact will be.


Equally self employment ends in Feb 25?  Do you mean your start up year ends or are you then going to close the business?  If you migrate now you will be given a years start up after which you’ll be under the MIF rules.

Spoonie_Turtle

peteuk said:

Under transition protection you £16K savings will be disregarded, for a year.  If during this time you drop below £16K then I believe this will be a change of circumstance and you will loose your TP.  

They would lose the disregard of anything over £16k as there is no longer anything to disregard, so going back over £16k would then make them ineligible for UC.

I don't think the transitional protection element itself would be impacted, but others will be able to confirm/correct.

Newcad

Paying off debt, including a mortgage, is allowed under UC and does not count as deprivation

As a migration from TC then any savings over £16k are disregarded for 12 monthly assessment periods, or until the savings drop below £16k. So if you drop below £16k in that 12 months then the savings disregard ends and your savings are then treated as normally for any UC claimant.

Meaning that once you go below £16k if you later go back up to above £16k then entitlement to UC will end.

Savings of between £6k and £16k are not disregarded and will still be deducted at £4.35 per £250 band of savings. (So a maximum of £174 deduction a month for savings if you have over £16k). That deduction rate is not changing in April.