Remortgaging with dss benefits as the source of income ...

lanex

Hi all,

I am on dss disability benefits, - SDA, DLA, IS, registered blind. I also get mortgage interest help with my mortgage. So I'm not sure which bit of the forum to put this on as it straddles the two sections of mortgages, and benefits. I didn't get any reply form the mortgage section of the forum so I'm trying here.
Currently my repayment mortgage is a fixed 4.49 percent deal which ends in July. Obviously I need to decide to go onto another product before I hit the SVR, which would bankrupt me.
My absconded husband (absconded but we're still legally married) is the guarantor for my mortgage and my current provider say there is no problem changing to another of their products because my mortgage account is in credit (due to them taking such a long time to administer my claim and there being a big backpayment due) and I / we are an existing customer. I also have a mortgage broker on the case and he says that using my husband's situation as a guarantor for the affordability calculator there should be no problem sorting out a mortgage. It's a 48 percent mortgage, so that helps obviously. I am waiting to see what his advice is but I want to understand his recommendations with regards to my own circumstances when he makes them.

My worry with a fixed rate deal at the moment is that the BoE may fall as it has been lately. The DSS pay their contributions based on the BoE plus 1.58 percent, and if this figure were to fall below the fixed rate I was paying I'd be hit with a big shortfall.
Also, the mortgage is two years old so I'm mostly paying interest on it. I know the dss only pay help for the interest part of the mortgage, but as I have such a good rate currently, they are paying almost all of the payments needed each month and I have only a very small shortfall, which of course is currently good for me. But how does this affect me when I'm starting to pay off capital on the mortgage in a few years time ? Do the dss still keep paying the same amount every month regardless of what the monthly mortgage payment due is made up of, i.e. in the future, more capital than interest ? This is the one thing I don't understand and having spoken to the dss, I am none the wiser. It's like a black art.

In view of the dss paying he BoE plus 1.58 percent, would a lifetime tracker mortgage be good for me ? My current mortgage provider do one that is 1.5 percent above the BoE with no tie ins. It seems like just the job for me - that or a better deal found by the mortgage broker if there is one - as what I get from the DSS tracks the BoE too but at 1.58. But it is really the answer to my prayers as it appears to be ? Or should I consider a fixed rate ?
Or maybe an interest only mortgage would be good for me. I'm looking at maybe sixty thousand of equity if the house prices don't crash and if I chose to move, which I would like to do within a couple of years, I am thinking of going for one of those part buy part rent houses. I am currently in the process of finding out if I can go onto the list to bid for those, either now or in the future. So if I'm not paying any capital off it doesn't really matter if I intend to move in the next few years, would I be right ?

Basically, I need to know which mortgage type will be best in the short term considering I am on ISMI and though the husband is on the mortgage as a guarantor, he is not interested in paying it. If I suddenly lost my dss benefits for some obscure reason I'd be shafted because rather than front up the money he would expect me to move out but touch wood I've been on them for twelve years and I'm never going to suddenly regain my eyesight or mobility, so I think I am virtually safe.

Any advice would be helpful. It's all abit more than this blind woman's noggin can deal with.

earthmother

I can answer one part of your query at least - unless something significant has changed in the last four years (when I last claimed this - and I doubt it has) the DWP will not increase your mortgage benefit for any reason other than an interest rate change at their end (ie, not on your mortgage). In other words, when your capital payments kick in, you will need to cover them.


As to changing your mortgage - I would check first that this will not affect your benefit - I have a niggling feeling that even on the same property, a new mortgage is counted as 'starting again' and hence incurs another long wait for benefit. This may of course only apply to second charges or mortgage increases, but all the same, worth getting confirmed before you make any new applications.

HTH

DaisyFlower

You may struggle to re-mortgage whilst on IS as you are still liable in full for the capital part of your mortgage. Your exisiting bank is probably the best bet but the DSS will still only help with the interest and not the capital regardless of how long the mortgage has left to run..

If your husband is not around, you're taking a huge risk asking him to be guarantor on a new product - how will he sign etc?

lanex

Hi earthmother.

Having talked to the dss on the phone they say a remortgage for the same property will count as an existing claim. They also did this when I moved here as I am disabled and had to move to be near my family and release the equity my husband wanted out of the previous property. They say they will continue to pay as long as the loan amount is not greater than the original loan amount, which luckily in this case it won't be.

Hello DaisyFlower.
Husband will sign his name on the line - he said so on the phone when I told him of the mortgage being up soon. He is absconded but in contact with me in an emergency, which is what I deem this to be right now.

So, could you elaborate on the capital repayments thing. At the moment I am obviously paying some capital in my monthly payments but the dss seem to be paying a percentage every four weeks which is more than the interest part of the mortgage due in that four weeks (I know it is more than because I am currently on a 4.49 percent fixed deal, and the BoE plus the 1.58 percent that the dss pay comes to more than that.) But I don't understand that they seem to be taking the whole mortgage payment amount to calculate their BoE plus 1.58 payment, not just the interest part of the payment. How can that be ? The mortgage company assure me this is normal as do the dss. But I am confused. Am I paying a really really small bit of the capital only at the moment, so small that this is how the dss payment seems to be on the whole monthly payment amount but is really only on the interest part ?
The mortgage details are in such small print I have problem reading them even under the magnifier. Perhaps this time, under the DDA, I should insist they are in large print or braille.