Technical question - UC AP

Altior

https://forums.moneysavingexpert.com/discussion/comment/81934022#Comment_81934022

Perhaps it varies between LAs, definitely for mine it states that you only have to apply directly through them due to extenuating circumstances, eg already on UC and moving to the area. If you apply for UC and request help with CT, by default you don't have to do anything else. It says the DWP will share my income with them which they will use to see if my CT bill can be reduced.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81934035#Comment_81934035

Thanks Yamor, yes the problem is that over time my equity would be evaporated by the exponential SMI liability. Theoretically I might be able to obtain a modest re-mortgage, but in practice I would need to have full equity.

It's something I have considered a lot, when I'm older possibly I will move to a rental scenario, equity release was a possibility anyway. The way I see it, I want to have as much control as possible and I feel like having no charge on the property gives me that. It's all hypothetical. I ran a scenario of SMI using current rates and the liability would reach my current mortgage capital liability in 22 years.

If I decide I'll stay here, then SMI is a no brainer, cheap form of equity release. I don't need to decide for a few years, what the pension option provides me with is an off ramp, when the SMI liability still remains manageable.

huckster

SMI is not guaranteed to be provided? You have to contact the mortgage lender and they may refuse? And there is a process and the application could be declined?

I think you need to have a spreadsheet or account noting current assets and liabilities. What money, savings and investments do you currently have and what credit do you currently owe that needs to be paid back.

Outside of this forum, if you had to explain your finances, it might help to have an overall summary account record, as well as individual account records.

If you were run over by a bus tomorrow and died would your next of kin understand your finances?

Altior

SMI isn't pivotal, at least on my current rate, but I've not seen anything to suggest that I wouldn't get it. Never been in arrears, been with the same lender for 14 years and never missed a payment. In the short term, it would give me more of a monthly surplus. Which I could actually use to overpay the mortgage.

This is one of the calls I need to make, exactly how much to overpay the mortgage with before applying for UC. I will assess that in July.

My affairs will be streamlined a fair bit as a result of applying for UC. I'm closing everything I don't need. I think I will be down to 3 bank accounts. I didn't really think about it too deeply at the time, I got my ESA paid into Chase and it's the only thing I use Chase for. I did have the linked Chase saver with the 1 year bonus interest, I've now closed the Chase saver, so I don't really need the ESA to go into Chase. Potentially I could switch into my main account, but I don't want to trigger any algorithms. It's no hassle really to submit that account, so I'll probably leave it and have my UC paid there until things have settled down.

born_again

https://forums.moneysavingexpert.com/discussion/comment/81933910#Comment_81933910

As per one of your others threads.

Best bet is to clear all the CC stoozing debt.

Once you have done that you will know exactly where you are in terms of exactly what level of capital you have.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81935738#Comment_81935738

That's exactly what I am doing right now, winding everything down.

Unfortunately as noted, I have unbreakable locked bonds, cash value of £6008. This thread was originally about a specific technical question as I was briefly considering expediting my application, as the disregard could take me below effective £6K capital (I thought!). Unfortunately, it exposed that a NS ESA back payment doesn't actually count for a disregard. So the substance of this thread is no longer critical.

I can't realistically now apply until I can access some of those locked bonds in June. Well, not without triggering a review, self evidently a review wouldn't be of any positive use to either party! A locked 3 year cash ISA matures in July, so it would then be a bit daft to pay the 4 month interest penalty to access it only a month earlier than the standard maturity date. So everything now logically points to an August application.

I pretty much know where I am know with it all, and this brief dalliance with applying earlier than I had anticipated has given me a preview into what I will need for real.

I do feel that it is prudent to retain some of the unsecured debt that has a 0% interest rate for at least another 12 months. And use the capital to overpay the mortgage instead. I've just not yet determined what the correct amount will be. It makes sense as it will mean a slightly lower SMI debt, and a lower monthly mortgage payment. But if I keep too much of it, I might not have another 0% deal to roll it over into. Once I have begun to pay down the cards I should then have a better feel of what the right balance of risk is.

Grumpy_chap

I remain confused about the OP having an "unbreakable locked bond" with a value of £6,008 and, on the basis of that, delaying a UC application until August.

How much UC has the OP calculated (use an online tool) they might receive? Over four months.

How much interest penalty will be for drawing the funds from the "unbreakable locked bond" and suffering any interest penalty for early closure?

The OP might be financially better to draw the funds immediately, clear the CC debts, then claim UC and receive the extra four-months' UC payment.

Altior

This is an example:

Investec
36 months fixed | Matures 29/06/2026
AER / Gross
5.76% 6.10%
Balance
£2,000.00

Can I withdraw money?
No.
You cannot make withdrawals or close the product before
29/06/2026.
At the end of the term we will return the money to the cash hub.

Absolutely nothing I can do to crack this :(

Without CT support, UC is of no net benefit to me with a high level of capital. So the locked bonds are £6K and the locked ISA is £4.5K. And I need money to live off! So let's say minimum £12K capital is worth about £100 UC, which I believe takes 5 weeks. And any capital over £6K triggers a review.

It's just not worth applying until I am under £6K.

born_again

Your capital should not trigger a review.

As you declare capital on application, so you either do or don't get through the gateway to get UC.

So you have £10.5K invested & whatever you have in bank accounts etc.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81936289#Comment_81936289

I've read that declaring capital of anything between £6K and £16K instantly triggers a review. Under £6K and there's no review for 6 months minimum. In one respect that has some logic, as UC payments vary between £6K and £16K, based on the specific level of capital. But anyone cheating who knows this could simply declare under £6K it seems to me!

While sleeping on this overnight, I was wondering if it was feasible to apply at the start of June and ignore that £2K bond. If it's only the capital at the end of the first AP that actually counts. As I would have used it to have settled debt by the end of the first AP, and wouldn't impact my payments.