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Support for mortgage interest

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Barbara Knight
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Leorn Welfare Rights Training Services, Derby

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Hi does anyone know what will happen if someone signs a deferred payment agreement to pay for care or already has a second mortgage? Who will get priority when the house is sold and how will anyone be able to work out if the equity can cover the different debts? This is going to be madness for the 76,500 pensioners with SMI.

     
Gareth Morgan
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Barbara Knight - 26 June 2017 03:45 PM

Hi does anyone know what will happen ....

No; really.

     
Andrew Dutton
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Derbyshire Welfare Rights Service

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Am I right in thinking that although the power to make Regulations about this has been activated (so to speak) the Regs themselves have not been made? Given Brexit, DUP deals and other matters, is it remotely realistic that Regs will be made (I mean properly) and a system put in to place on time?

Gareth may respond very much as he did to the last query - ?

     
stuart
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New regulations out today providing for loans instead of support for mortgage interest… Loans for Mortgage Interest Regulations 2017 (SI.No.725/2017)

      [ Edited: 8 Jul 2017 at 06:43 pm by stuart ]
Paul_Treloar_AgeUK
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Information and Advice Resources, Age UK

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This just popped into my inbox with attached documents.

Dear partner,

As you may be aware, the Department for Work and Pensions (DWP) currently offers a benefit called Support for Mortgage Interest (SMI). It is also known as Help with Housing Costs. SMI pays towards the interest on a mortgage and other eligible home improvement loans. SMI is offered to claimants who receive income-based benefits and are either of pension age or out of work.

The Government announced in the 2015 Summer Budget that SMI would be changed from a benefit to a loan. This loan may be secured by a second charge on the claimant’s property.

On 5 April 2018, SMI benefit will end. This means that from 6 April 2018, claimants need to ensure the interest on their mortgage and home improvement loans is paid. Claimants can accept the offer of SMI loan payments from DWP. This is entirely voluntary. The SMI loan would need to be repaid – plus interest – once their property has been sold or its ownership transferred.

Choosing to receive an SMI loan is one of the ways claimants might wish to ensure the interest on their mortgage and home improvement loans is paid. However, the SMI loan will not replace SMI benefit automatically, as claimants will need to complete and return loan documents first.

Claimants may want to seek help and support on how the charge on their property might affect them and their household in the future. We have created a summary of the changes to SMI specifically for organisations like yours, which you can find attached to this email in both English and Welsh. We have also updated the GOV.UK pages on SMI, which you can find at https://www.gov.uk/support-for-mortgage-interest

Kind regards,

     

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Andrew Dutton
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Derbyshire Welfare Rights Service

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Interesting that the gov.uk link says that people will get a letter in February 2018 telling them about the change - somewhat later than the original planned date of June this year, and bound to cause a few problems, being right on top of the date of change - how will people get advice in time???

Still nothing on the ‘independent provider’...?

     
Paul_Treloar_AgeUK
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Say they will get letter “by February 2018” - I understand that letters will start going to those affected very shortly.

They have appointed Serco to call claimants, see bottom of page 4.

     
Andrew Dutton
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Ta, I’m obviously not concentrating today…

     
stuart
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Secondary legislation scrutiny committee has reminded DWP that it needs to offer face to face explanations of loan payments and the acceptance process as well as telephone / online contact with SERCO.

https://publications.parliament.uk/pa/ld201719/ldselect/ldsecleg/14/1405.htm

     
Oldestrocker
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I can foresee that the recovering of this ‘debt’ will be a nightmare for some. Once again the government are approaching the issue with a ‘one size fits all’ mentality.

I have clients (husband and wife of over 40 years) who currently receive GPC + housing costs.

The property bought in 2000 solely by the wife for £245,000 was funded in part by a loan from a Discretionary Trust of £145,000 of which she is one of the beneficiaries along with their children (her husband settled the Trust in 1995) and an interest only mortgage of £100,000.
His wife has maintained the interest payments to the bank out of her own resources over the past 17 years. The loan from the DT has interest rolling up at the rate of 8% compound. The current balance owed to the DT is £543,000, to the bank £100,000 and the current value of the property is £600,000.
The DT will shortly advance a further £100,000 to settle the mortgage with the bank.

The husband has no legal right to the house or it’s value and in fact lives with his wife as a ‘lodger’!

Eventually when and if the house is sold the entire proceeds will find their way back into the DT for the benefit of their children, thereby avoiding care home fees etc and any Inheritance Tax issues.

I presume that the DWP will seek to have the husband sign the loan agreement even though he is not a party to the mortgage nor does he appear on any of the documents at Land Registry. Logically the husband should refuse to sign the agreement as he has no power to enter into any agreement that affects the property.

Fun and games to be had!!

      [ Edited: 20 Jul 2017 at 03:53 pm by Oldestrocker ]