The Truth about ISA Mortgages

Tiddler_2

I may be a bit naive here but don't ISA's used to support a mortgage require a regular payment in the same way that endowment policies do? If so - how do they expect to maintain the payments to the ISA if they have no other significant savings, and are living on income support.

So there would be a high probability that their investments would not be sufficient to repay their mortgage anyway. If they expected to be unemployed for the remainder of their working lives, then wouldn't they be aswell to pay the value of their investment off their mortgage, then they have NO savings and if they have an amount of mortgage left over they may receive some payments towards that.

I'd also like to know where William got his Isa/PEP from in 1986!!

Rabiddog_2

NO.. I think its a Valid point about the ISA being included for means tested benefits. But even worse wouldnt the amount between £8000 and £16000 also be used on a sliding scale to reduce benefits? Quite a few people might have an ISA as part of a mortgage repayment strategy.

ISA's may be ended but then so might any other Tax related device?

Say no to small fonts! I can barely read the Health warnings on my untipped Woodbines as it is!

dunstonh

Typically, if someone was in that position you would just use the PEP/ISA to clear that chunk of the mortgage. The flexibility of ISAs allows that to happen and that is what would be expected.

ISA's may be ended but then so might any other Tax related device?

They may be but historically, the Govt allows people to keep what they have accrued. Just like PEPs, pension term assurance pre 2001 and Life assurance taken out before LAPR was abolished. So, if ISAs were abolished (unlikely considering the savings gap) then you should be ok with what has built up to date with future contributions going towards the unwrapped UT/OEIC/SICAV.

maveli

I am a bit worried now. We got around 30K in ISA between me and wife. Does this mean I am not eligible for benifits if I loose my job ?.

Paul_Herring

Typically, if someone was in that position you would just use the PEP/ISA to clear that chunk of the mortgage. The flexibility of ISAs allows that to happen and that is what would be expected.

But wouldn't deprivation rules come in? Because they have(had) that money 'in their hand' so to speak, deliberately 'spending' it to pay off a mortgage would surely count against them.

Paul_Herring

maveli wrote: »

I am a bit worried now. We got around 30K in ISA between me and wife. Does this mean I am not eligible for benifits if I loose my job ?.

You can get 6 months contribution based JSA regardless of your savings, but that's about it I think

maveli

Paul_Herring wrote: »

You can get 6 months contribution based JSA regardless of your savings, but that's about it I think

I think this unfair. We saved the amount by not blowing it on luxuries and will get peanalised for that. I work for a US company and redundancies are going to happen soon. What if I use the ISA to pay part of my mortgage on the day I loose the job. Will I be eligible then ? Is there a web site were I can find more info ?

Thanks
maveli

Dan_Collins_2

You wont get anything for 9 months anyway, and if you get anything once that period is over, you will will still need more. Also if you opted out of ASU cover the government are thinking or have been in the past, that your on your own tough titty!

dunstonh

Paul_Herring wrote: »

But wouldn't deprivation rules come in? Because they have(had) that money 'in their hand' so to speak, deliberately 'spending' it to pay off a mortgage would surely count against them.

No. If there wasnt a mortgage then "losing" the money would be. However, an ISA for a mortgage being used to pay towards the mortgage is not deprivation of assets.

michaels

So the picture is not quite as black as first painted. JSA is payable for the first six months and then it is ok to use the isa (or all except 8K of it) to pay down the mortgage. Obviously there are issues around mortgage company repayment restrictions and the value of any stocks and share isas and whether it is a 'good' time to cash them in but having such a vehicle does not prohibit receiving benefits altogether?