Mortgage Interest Support, MI12 and JSA3

[nks22]

Hi BlurredFX - do you know for sure that the 6.08% is a fixed rate rather than a ceiling rate??

It's a fixed rate.

 

I am currently in the 13 week waiting period and it is my understanding also that the rate is fixed so if your interest rate is less than 6.08% then the extra is deposited back to your bank account and can go towards paying off the capital!!

The surplus doesn't go to your bank account - the lender keeps it and, AFAIK, it's up to them what they do with it. I asked mine (BoS) about this as I'm on SVR of 4.84% and they said they put it to one side to cover any future shortfall in repayments and won't use it to reduce the capital.

 

It's something I plan to take up with them but at present I'm still in arrears, although the extra interest will cover those within a few months. Not that I'm not very grateful for the help but don't see why BoS should benefit from the government's generosity rather than me!

 

I have also read that if your mortgage rate is a lot less than 6.08% (5% or less) they will only pay the interest charged by your bank.

 

I haven't heard that and I'm receiving the full 6.08% for my 4.84% mortgage rate.

[nks22]

Incidentally, you can also claim for things like service charges (e.g. if you're a leaseholder in a flat with a charge for cleaning of common areas). It's not clear exactly what will be covered; I was told just to apply and they'll pay for whatever they decide is eligible.

[nks22]

if its lower then the overpayment will pay off some of the capital

 

Possibly but it seems to vary depending on the provider. Mine (BoS) say they'll just hang on to it in case of future arrears - something I plan to challenge once I'm in credit.

[nks22]

I don't see that the lender can justify treating payments in a different way because they come from the DWP rather than the borrower. I expect to have any surplus taken off the capital as it would be if I'd chosen to make overpayments myself.

[nks22]

Any experiences to share NKS?

 

Not yet. Still in arrears!

 

By 'overpayments', do you mean paying off the interest and then some of the capital or paying off both and there is still some extra?

 

I think it's the excess over the interest payment due that the mortgage companies receive in the 6.08%. It's unclear what different lenders plan to do with the spare money.

[nks22]

Mine's an interest-only mortgage but the terms allow me to make lump sum or regular overpayments at any time. Any overpayments "will reduce the balance on your mortgage account".

[nks22]

Bank of Scotland. I think it's a fairly common arrangement, though.

[nks22]

From today's Budget:

 

"The Support for Mortgage Interest scheme, which I enhanced during the recession, is already helping 220,000 homeowners who lost their jobs.

"To maintain this help during the recovery, I will continue to pay this support at the higher rate for another six months."

 

 

I'm not sure where that six months takes it, though.

[nks22]

I had to push very hard to eventually get someone from DWP/BDC to phone me back with the correct verified informatiion

 

Which was what?

[nks22]

You'd think it might be possible to give people the actual amount they have to pay. It would, of course, involve more admin but there would be considerable savings from those (including me) who are currently benefiting from overpayments.

[nks22]

While I'm here, is anyone receiving payments for other housing costs like service charges? I was told I should put a claim in (I'm in a leasehold flat and pay management charges, etc.) and they'd see if anything qualified but despite doing this twice I've heard nothing back.

[nks22]

Yep..I get some money for ground rent & service charges

 

Thanks. I shall persist then.

[nks22]

I'm now getting money for service charges and ground rent! Unfortunately they've only dated it from my second letter to them (27 May) so I now have to appeal to get it backdated at least to my first, ignored, letter if not to the start of my ESA claim.

[nks22]

Benefit that pays interest on loans to be halved from October

 

The benefit, which pays the interest on a mortgage, is to be reduced from its present value of 6.08% to what the government says is the Bank of England average mortgage rate of 3.67% – a cut that means a loss of £1,300 annually for every £100,000 borrowed.

 

http://www.guardian.co.uk/society/2010/aug/09/mortgage-benefit-cuts-disabled-housing

 

The article is about benefits for the disabled but presumably the same cut will apply to everyone else.

[nks22]

Although Knight Frank is predicting a rise in average mortgage rates of about 0.5% p.a. over the next four years.

[nks22]

Too true. And anyone on benefit is not going to be in a position to shop around for a new mortgage. My fixed deal ended last December and I now pay the standard variable rate of 4.84% (Bank of Scotland). The change will cost me £66/week, although I'll 'only' have to find £32/week to make up the monthly repayment on my loan.

[nks22]

The cut in interest payments was discussed on Radio 4's MoneyBox today. Apparently only a minority of recipients are unemployed with most being either disabled or on Pension Credit. Shelter have asked that the government pay according to actual rates rather than the same percentage for everyone. No-one from the government would speak to the programme.

 

I had my letter last week to say my payments were being reduced. Just one week's notice and with no explanation given for the reduction. It must be very confusing for many claimants.

[nks22]

Thanks. Will do.