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  • FIRST POST
    • MSE Guy
    • By MSE Guy 29th Sep 10, 8:06 AM
    • 1,628Posts
    • 1,255Thanks
    MSE Guy
    MSE News: Support for mortgage interest benefit cut by thousands
    • #1
    • 29th Sep 10, 8:06 AM
    MSE News: Support for mortgage interest benefit cut by thousands 29th Sep 10 at 8:06 AM
    This is the discussion thread for the following MSE News Story:

    "230,000 struggling householders will see state handouts dive by a typical 3,700 a year from October ..."

Page 1
    • michaels
    • By michaels 29th Sep 10, 8:53 AM
    • 22,394 Posts
    • 103,119 Thanks
    michaels
    • #2
    • 29th Sep 10, 8:53 AM
    • #2
    • 29th Sep 10, 8:53 AM
    Can anyone explain why the benefits can not pay the actual interest bill rather than a one size fits all rate, please?
    Cool heads and compromise
    • fatbelly
    • By fatbelly 29th Sep 10, 9:13 AM
    • 13,736 Posts
    • 10,801 Thanks
    fatbelly
    • #3
    • 29th Sep 10, 9:13 AM
    • #3
    • 29th Sep 10, 9:13 AM
    I can see a logic in moving from 6.08% to 3.63% but...

    This is payable on the eligible part of loans only, so where people have remortgaged, generally only the amount borrowed originally to buy the house qualifies.

    The unfortunate consequence is that many people who were getting their contractual payment covered at 6.08% will not have it covered at 3.63% (so a 608 payment reduces to 363 per month) and have to make up the difference from their JSA/ESA/IS/Pension Credit. As a single person's JSA is 65.45 per week that might be difficult!

    It would be nice to think that the problematic Mortgage Rescue Scheme would be sorted out to compensate for this. Don't hold your breath.
    • Peelerfart
    • By Peelerfart 29th Sep 10, 9:16 AM
    • 1,998 Posts
    • 1,720 Thanks
    Peelerfart
    • #4
    • 29th Sep 10, 9:16 AM
    • #4
    • 29th Sep 10, 9:16 AM
    Can anyone explain why the benefits can not pay the actual interest bill rather than a one size fits all rate, please?
    Originally posted by michaels
    It's so that some people can get the taxpayer to overpay their mortgage for them and then whinge whenthey can't get "their" money back.

    Sound familiar to anyone ?

    Space available for rent
    • Frozenace
    • By Frozenace 29th Sep 10, 11:35 AM
    • 245 Posts
    • 181 Thanks
    Frozenace
    • #5
    • 29th Sep 10, 11:35 AM
    • #5
    • 29th Sep 10, 11:35 AM
    According to those figures, is the government really going to save 839 million pounds?? (3700 * 227k)

    Sounds like a lot of money.
  • opinions4u
    • #6
    • 29th Sep 10, 12:26 PM
    • #6
    • 29th Sep 10, 12:26 PM
    Can anyone explain why the benefits can not pay the actual interest bill rather than a one size fits all rate, please?
    Originally posted by michaels
    One of my first ever jobs working for the old Halifax Building Society was advising the DHSS what rate of interest customers were paying on their mortgage.

    Most mortgage lenders only had one interest rate back then, and those rates were within 0.5% of each other.

    So it made sense to save on paperwork to introduce a single rate which happened, I think, in the early 1990s.

    The market has changed massively since then. We have SVRs in the mainstream ranging from 2.5% - 4.99%. We have introductory rates between 2.19% and 6.99%.

    So government bodies haven't kept up with the market and a one-size fits all benefit doesn't quite work.

    Still, it's not the time to be paying for more staff on the government payroll to cover this. Perhaps claimants should just be grateful that they receive anything at all, especially if they chose not to protect their mortgage.
    • peterbaker
    • By peterbaker 29th Sep 10, 3:00 PM
    • 2,418 Posts
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    peterbaker
    • #7
    • 29th Sep 10, 3:00 PM
    • #7
    • 29th Sep 10, 3:00 PM
    Perhaps claimants should just be grateful that they receive anything at all, especially if they chose not to protect their mortgage.
    Originally posted by opinions4u
    With respect, this is rather a silly comment, especially from someone who has both industry experience and MSE experience. You are implying that benefit claimants with mortgages should have purchased Mortgage PPI as if that is some universal solution for the public good which I recall is more or less how a naive young Tony Blair described it when he moved the start date for full mortgage interest benefit out to 9 months from the date of first registering for JSA.

    Mortgage PPI is of course no better than any other PPI as "protection" - the 'successful claim' statistics being scandalously low for all types of PPI - so how else are unfortunate benefit claimants supposed to have protected themselves?
    Last edited by peterbaker; 29-09-2010 at 3:07 PM.
    • mbeast
    • By mbeast 29th Sep 10, 3:08 PM
    • 54 Posts
    • 16 Thanks
    mbeast
    • #8
    • 29th Sep 10, 3:08 PM
    • #8
    • 29th Sep 10, 3:08 PM
    there's a 99% chance I'm now going to lose my house
    I was happy paying 570 per month whilst working as well as managing to cover all my other bills but due to illness I'm unable to work now although i wish i could (even more so now).
    At the time when i remortgaged I thought I got a good deal getting a fixed rate at 5.9% for 10 years a few years ago (if only i knew rates where going to drop :/) so atm I'm just able to cover all the household cost and I'm left with 80 to feed and cloth me, my wife and my 3 month son and a little for fuel for the car in emergencies.
    I've already accepted that in January I'll no longer be able to run the car when the mot and insurance run out as there's no way of getting the money to cover the cost but as long as we have the house and some food all is well.
    now the goverment is going to cut the amount that I can get to help pay towards my mortgage cost :@, atm I get 408 per month and pay the other 162 per month myself which I'm just able to do but from October I'll be getting around 30-40 per week less which means feeding and clothing the 3 of us on 40 to 50 per week which is going to be impossible .
    I've contacted my mortgage company who due to me having to go bankrupt can't change me over to interest only and I can't remortgage to a lower rate so I'm up the creak without a paddle.

    I've contacted my local council who can't help unless I have a repossession order and then will only put me in temporary housing until a 2 bed place comes available so i asked how much help I would get towards private renting if I could find a place, 110 per week :@
    I'm like what the hell, I can get 110 per week towards private rent but can't get that towards my mortgage. I thought that was bad enough at getting 101 per week now towards my mortgage but its a real kick in the nuts when my payments drop to 60-70 per week.
    where is the common sense in me losing my house to go into private / local housing where there going to have to pay more towards it.
    how the hell is the government saving money doing this is beyond me.

    before people shout payment protection, that only payed out for the 1st year and if work was a option then trust me I'd be there right now instead of typing this .
    Last edited by mbeast; 29-09-2010 at 3:11 PM.
    • peterbaker
    • By peterbaker 29th Sep 10, 3:33 PM
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    peterbaker
    • #9
    • 29th Sep 10, 3:33 PM
    • #9
    • 29th Sep 10, 3:33 PM
    mbeast, might be worth seeking advice in the Debt Free Wannabe or Bankruptcy forums if you haven't already ... it is easy to say, but I don't think you need worry unduly about losing the house or the car if you have already made the decision to apply to be declared bankrupt ... I am no expert but there are definitely experts on this in those other forums.
    • michaels
    • By michaels 29th Sep 10, 3:35 PM
    • 22,394 Posts
    • 103,119 Thanks
    michaels
    Thanks for this.

    My thought is that rather like PAYE is done by the employer, surely the govt could push all the administration costs on to the mortgage companies - they are after all benefitting from having the interest paid so are less likely to have to repossess/manage arrears etc so why shouldn't they put up with the administrative cost.

    One of my first ever jobs working for the old Halifax Building Society was advising the DHSS what rate of interest customers were paying on their mortgage.

    Most mortgage lenders only had one interest rate back then, and those rates were within 0.5% of each other.

    So it made sense to save on paperwork to introduce a single rate which happened, I think, in the early 1990s.

    The market has changed massively since then. We have SVRs in the mainstream ranging from 2.5% - 4.99%. We have introductory rates between 2.19% and 6.99%.

    So government bodies haven't kept up with the market and a one-size fits all benefit doesn't quite work.

    Still, it's not the time to be paying for more staff on the government payroll to cover this. Perhaps claimants should just be grateful that they receive anything at all, especially if they chose not to protect their mortgage.
    Originally posted by opinions4u
    Cool heads and compromise
    • mbeast
    • By mbeast 29th Sep 10, 3:44 PM
    • 54 Posts
    • 16 Thanks
    mbeast
    mbeast, might be worth seeking advice in the Debt Free Wannabe or Bankruptcy forums if you haven't already ... it is easy to say, but I don't think you need worry unduly about losing the house or the car if you have already made the decision to apply to be declared bankrupt ... I am no expert but there are definitely experts on this in those other forums.
    Originally posted by peterbaker
    I went bankrupt Jan 2008 and only got to keep the house due to negative equity and was pleased at the time I'd get to keep my house but now it seems I've jumped out of the frying pan and into the fire.

    I don't know what I hate the most, most likely losing the house now or the fact that if the mortgage was in someone else name I'd be able to get 110 per week towards it and would be able to stay
    • lemontart
    • By lemontart 29th Sep 10, 5:48 PM
    • 5,835 Posts
    • 7,416 Thanks
    lemontart
    this confuses me as in the long run they will end up paying more in benefits towards rent as people loose their homes are forced into the rental market and the meeting hte costs of temporary accomodation is no doubt often a lot more than the interest repayments on a mortgage, I am lucky at mo as coming to end of mortage so only 180 a month plus endowment (though I am facing a shortfall when it matures in couple of years) now to pay rent on a 2 bed place in my area is around 350 plus so difference is considerable as renters get more finacial help than house owners. so surely the simple maths of it does not add up.
    This is a short sighted cut that will cost more than it saves in the long term
  • opinions4u
    With respect, this is rather a silly comment, especially from someone who has both industry experience and MSE experience.
    Originally posted by peterbaker
    Well it was written in a rather tongue in cheek kinda way. So apologies if it offended.

    You are implying that benefit claimants with mortgages should have purchased Mortgage PPI as if that is some universal solution for the public good which I recall is more or less how a naive young Tony Blair described it when he moved the start date for full mortgage interest benefit out to 9 months from the date of first registering for JSA.
    I thought it was a previous Tory administration that moved it from 3 months to 9 months?

    Mortgage PPI is of course no better than any other PPI as "protection" - the 'successful claim' statistics being scandalously low for all types of PPI - so how else are unfortunate benefit claimants supposed to have protected themselves?
    The insurance itself isn't the issue for me. The cover (and what's not covered) is usually fair and reasonable. The amount of premium that gets paid out at the other end in claims is too low. In other words, it's poor value for money.
    Last edited by opinions4u; 29-09-2010 at 9:41 PM.
    • mbeast
    • By mbeast 29th Sep 10, 7:57 PM
    • 54 Posts
    • 16 Thanks
    mbeast
    I agree that it looks like it will end up costing the government more in the long run with this new payment method which has now left me stuck between or a combination of 3 options.

    1: start paying 300 per month (currently 162 per month and 80 left over for food, cloths etc) myself and then have myself, wife and 3 month old live on @45 per week after household bills are paid (baby formula alone is @8 per 5-6 days).
    2: stop paying my mortgage and get a repossession order to then be rehoused in some grotty council estate.
    3: do #1 but get the house on the market to be sold but be left minus 20k down unless house prices somehow go up @25% in the very near future and then still end up in some grotty council estate.

    I guess there's a 4th option if I knew someone else to buy the house so I can private rent it from them until I'm able to somehow be able to afford to pay the mortgage myself which as I mentioned above, if i was allowed the same to my mortgage as I would get to private rent wouldn't be a problem in the 1st place :@.
    • sapman17
    • By sapman17 29th Sep 10, 8:22 PM
    • 76 Posts
    • 14 Thanks
    sapman17
    Is there no appealing this might be vvv bad for me
    Is there no appealing this might be vvv bad for me.
    have to get in touch with braintree dc homeless section again help much appreciated
  • ILW
    I agree that it looks like it will end up costing the government more in the long run with this new payment method which has now left me stuck between or a combination of 3 options.

    1: start paying 300 per month (currently 162 per month and 80 left over for food, cloths etc) myself and then have myself, wife and 3 month old live on @45 per week after household bills are paid (baby formula alone is @8 per 5-6 days).
    2: stop paying my mortgage and get a repossession order to then be rehoused in some grotty council estate.
    3: do #1 but get the house on the market to be sold but be left minus 20k down unless house prices somehow go up @25% in the very near future and then still end up in some grotty council estate.

    I guess there's a 4th option if I knew someone else to buy the house so I can private rent it from them until I'm able to somehow be able to afford to pay the mortgage myself which as I mentioned above, if i was allowed the same to my mortgage as I would get to private rent wouldn't be a problem in the 1st place :@.
    Originally posted by mbeast
    You lost my sympathy when you started going on about grotty council estates. Why should the people in these places be paying for you to stay in your nice area whilst you look down on them.
    • peterbaker
    • By peterbaker 29th Sep 10, 9:34 PM
    • 2,418 Posts
    • 1,070 Thanks
    peterbaker
    Well it was written in a rather tongue in cheek kinda way. So apologies if it offended.
    Originally posted by opinions4u
    Ah ... sorry I missed the tone

    I thought it was a previous Tory administration that moved it from 3 months to 9 months?
    You may be right in that they enacted it but I think it possibly came into effect early in young Tony's reign and I distinctly remember cringing when he talked about how people could buy insurance instead.

    The insurance itself isn't the issue for me. The cover (and what's not covered) is usually fare and reasonable. The amount of premium that gets paid out at the other end in claims is too low. In other words, it's poor value for money.
    It is very much the insurance that is the issue - the underwriters couched the wordings in such fashion as to to make it easy for them to decline claims. It was always far worse than simply 'poor value for money', which is why PPI reclaiming touts have been having a field day, albeit far too late to offer real help to people who crashed and burned when their claims were declined long before the 'misselling' scandal/bandwagon reached a critical mass.

    What a way to run a railroad, eh? Rip-off products disguised as something good, reneged contracts, people hurt, scandal eventually builds impetus, misselling vultures clean up. How many of these scandals have we had now? Far too many.

    And then after all is said and done, industry leaders have the gall to write a letter to the Financial Times yesterday like this: http://www.ft.com/cms/s/eb26484e-cb2d-11df-95c0-00144feab49a.html (you'll need to register for free to read it)

    Apologies for straying a bit off topic ...
    • MissMoneypenny
    • By MissMoneypenny 29th Sep 10, 9:41 PM
    • 5,179 Posts
    • 8,426 Thanks
    MissMoneypenny
    but from October I'll be getting around 30-40 per week less which means feeding and clothing the 3 of us on 40 to 50 per week which is going to be impossible .
    Originally posted by mbeast
    Here is a website for recipes for feeding a family of 4 for 100 a month.
    http://www.cheap-family-recipes.org.uk/
    I got the link from another thread today and the poster said the site is from a poster on these boards.

    You could also try the DFW board for help with cutting your other household costs.
    RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
    Read the sticky on the House Buying, Renting & Selling board.


    • Thrugelmir
    • By Thrugelmir 29th Sep 10, 10:24 PM
    • 63,091 Posts
    • 56,011 Thanks
    Thrugelmir
    . We have SVRs in the mainstream ranging from 2.5% - 4.99%.
    Originally posted by opinions4u
    A couple of months back, the average SVR across all CML members was 4.64%.

    Surprisingly high.
    "'The mistakes we make as investors is when the market's going up, we think it's going to go up forever. When the market goes down, we think it's going to go down forever. Neither of those things actually happen. Doesn't do anything forever. It's by the moment.'" - John Bogle
  • sophievenusdoom
    I agree that it looks like it will end up costing the government more in the long run with this new payment method which has now left me stuck between or a combination of 3 options.

    1: start paying 300 per month (currently 162 per month and 80 left over for food, cloths etc) myself and then have myself, wife and 3 month old live on @45 per week after household bills are paid (baby formula alone is @8 per 5-6 days).
    2: stop paying my mortgage and get a repossession order to then be rehoused in some grotty council estate.
    3: do #1 but get the house on the market to be sold but be left minus 20k down unless house prices somehow go up @25% in the very near future and then still end up in some grotty council estate.

    I guess there's a 4th option if I knew someone else to buy the house so I can private rent it from them until I'm able to somehow be able to afford to pay the mortgage myself which as I mentioned above, if i was allowed the same to my mortgage as I would get to private rent wouldn't be a problem in the 1st place :@.
    Originally posted by mbeast

    I am probably going to sound really harsh here, but you say you were made redundant in Jan 2008, yet you have a 3 month old son? Not wishing to tell you how you live your life, but if I were in the dire situation you are, I probably would have put the baby making on hold until I were a lot more financially sound.
    I have been in the insurance industry for the past 6 1/2 years (protection products)


    We have now bought our first home (completion date - 23.07.2010)

    Wedding budget: 2,000 so far spent: 1,850. Wedding date of 27.08.2011
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