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Client is iro of IS as a lone parent including housing costs. She wishes to sell up and move to another part of the country and buy a new house to be nearer parental support and where she thinks there is a better chance of getting a job. Under IS regs sch 3 para 4(6) it appears she could get housing costs included in her applicable amount for a loan used to buy the new property (up to the level of the previous mortgage), and that there is no limit to the time between redeeming the first mortgage and taking out the new loan (commentary in Bonner p591). I assume she would have to remain iro IS for the intervening period, except for a maximum 13 weeks, and that there would be no 13 week waiting period in respect of the second loan.
She is unlikely to be able to get a mortgage for the new house while on IS, so her parent would be prepared to lend her the money under a formal agreement for the express purpose of buying the new house, with interest only payments at a specified rate. She would repay the capital when she gets a job and could then hopefully get a mortgage. I can't see anything in the regs which says that a loan cannot be from a close relative who lives elsewhere, or that the loan has to be secured on the property.
Would all this work do you think?
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