SMI Mortgage Interest 50% Cut !

[dazzammm]

I encourage people to read the report Andy mentioned. The offical estimate is 110,000 people will have a short fall. Thats half of the people on the scheme and as mentioned yesterday the average IR is over 4% and not the figure quoted by the gov so this figure will probably be higher.

[dazzammm]

Am I right in thinking that this only affects mortgage interest payments and not the equivilant housing cost (rent) benefit.

it seems like the government want the lenders to take some responsibility by using us as pawns as they havent got the balls to get it them selves.

 

reminds me of south park the movie when they are at war with canada. The first group to go over the top are a group of black people and are called Cannon Fodder division.

[andydd]

Housing Costs are also going to be cut arn't they ?. I believe there will be a max limit they will pay, so people in hign cost areas such as London may find they are in trouble.

 

Andy

[jasonpauld]

I emailed Iain Duncan Smith

 

This is the reply to my email raising my concerns of having to find an extra £156 pounds a month to pay my interest on a mortgage.

 

Thank you for your e-mail of 27 September to the Secretary of State concerning Support for Mortgage Interest (SMI) payments. I hope you will understand that Mr Duncan Smith is unable to deal personally with the vast amounts of correspondence that are received each day. Therefore, since your letter falls under the remit of this Department, I have been asked to respond.

 

As you are aware, SMI makes a contribution towards the eligible interest on loans taken out to purchase the property and specific loans for repairs and improvements which are necessary to maintain the home's fitness for habitation, and so provides reasonable help for homeowners.

 

A person's eligible mortgage interest is calculated using a standard interest rate and the capital balance (net of arrears) outstanding on the loan taken out to purchase the home, and for certain loans for repairs and improvements.

 

The standard interest rate used to calculate SMI is currently 6.08 per cent for all existing and new customers. Freezing the rate at 6.08 per cent from November 2008 was always intended as a temporary measure. Before then the standard interest rate was based on a formula which meant that the rate decreased or increased in line with the Bank of England base rate.

 

The Chancellor announced in the Emergency Budget on 22 June 2010, that in order to put SMI on a more sustainable footing, and to better reflect mortgage costs, the standard interest rate will be set at a level equal to the Bank of England’s published monthly average mortgage interest rate. This will also provide better value for money for the taxpayer.

 

This change is to come into effect from 1 October 2010, and will be based on the August average mortgage rate. This rate is based on information from around 30 banks and building societies, covers over 75 per cent of all banks and building societies’ mortgage business and is a weighted average of all existing loans to households secured on dwellings in the sample. The starting rate that will apply from 1 October will be 3.63 per cent (the rate published by the Bank of England on 31 August 2010).

 

From 1 October any subsequent changes to the standard interest rate would only occur when the Bank of England average mortgage rate moves by 0.5 per cent or more.

 

Whilst I appreciate your concern, it must be borne in mind that it has never been the Government’s intention that SMI would cover all of a person's housing liabilities. No help is provided towards mortgage capital repayments or arrears, endowment or insurance premiums. It is important to remember that the purchase of a home involves the acquisition of a valuable capital asset and a fair balance has to be struck between the needs of homeowners and the cost to taxpayers. When the amount provided through benefit is less than the lender's rate charged on the loan, the responsibility lies with the claimant, working together with the lender, to meet any shortfall in payments.

 

The Government will continue to work closely with lenders and debt advice agencies to ensure that repossession is only ever a last resort; and expects to see lenders continuing to offer support and forbearance to their customers who are struggling with their mortgage.

 

If you are having difficulty with your mortgage payments, you may want to contact your lender as soon as possible to discuss the situation.

 

The National Homelessness Advice Service has also produced a leaflet, Are you worried about your mortgage? Get advice now. This provides clear advice for homeowners struggling to pay their mortgages and provides contact details for advice services

Yours sincerely

 

 

 

Mrs Sue Mellerick

Edited September 29, 2010 by jasonpauld
cant spell

[sillygirl1]

Has anyone thought that the government are being sneakily clever in doing this, as many housing abuses are carried out (so one understands from the newspapers) by buy-to-let mortgages and people who buy property cheap, do it up cheap and then let it out for top money....

 

In some ways they are biting the hand that feeds them and in other ways they are shutting the stable door, neither bodes well for other cuts coming...

 

There will be a peoples revolt some time after Easter next year, truly a repeat of the old 'winter of discontent'....

[jasonpauld]

As you can see the "Coalition Governement" are hell bent on seeing the poorest end up without a house and dead. Is that what Cameron wants? The poorest and most vulnerable wiped out? Thats whats going to happen. I think benefit removal without written notice is disgusting and probably illegal. I get a letter to tell me I wont be able to eat or heat my house or pay essential bills as the roof over my head eats up my incapacity benefit. I wont be voting tory or libdem. Come back Gordon Brown he defended Natural Justice and kept SMI at 6.08%!

 

[diddled]

A friend recevied a letter from her mprtgage lender this morning re imminent SMI interest rate cuts.

 

It seems that the DWP is putting all the onus on the borrower to ensure the correct amount is paid, as it states

"Usually the DWP would also notify us of any revision to your support entitlement, however on this occasion they have confirmed that they will not be notifying lenders of the revision"

[andydd]

My lender was unaware of any change when I spoke to them. Not sure if my lovely (!) TV appeareance achieved anything as this still seems to have been ignored by most media, perhaps when there is a sudden increase in repossessions then people will begin to take notice.

 

The facts (from the governments own report) are that 50% of people will now be in danger of not even being able to meet the minumum of interest only payments, this is assuming your lender will accept interest-only payments, many that will (like mine) will only accept it for a limited period.

 

Andy

[nks22]

What do you mean this benefit will dissapear under the 2 year rule

 

If you're unemployed you can only receive the mortgage payments for two years. There's (currently) no time limit for recipients claiming due to sickness or disability.

[nks22]

The cut in payments was discussed on Radio 4's MoneyBox (5:53 in):

 

http://www.bbc.co.uk/iplayer/episode/b00v11d8/Money_Box_02_10_2010

 

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]

I encourage people to read the report Andy mentioned.

The report's authors admit that their sample data (from November, 2009) is "not a statistically robust sample". So their entire assessment of the impact of the changes is based on an analysis of data which they themselves say can provide no more than a "useful insight".

 

Housing Costs are also going to be cut arn't they

 

They are, although not for another year:

 

http://www.guardian.co.uk/news/datablog/2010/jul/15/housing-benefit-cuts-local-analysis

 

Interestingly, if I was forced to sell up and instead rent I'd be eligible, even after the changes, for 50% more in housing benefit than I now receive in SMI.

[dehowletts]

We get ISMI and have yet to get a letter about any reduction in payment.

 

We have a suspended possession order on our main mortgage and have an upcoming possession hearing on our 2nd loan which is with the same lender.

 

Our local authority have helped us by negotiating with the lender and are putting us through the mortgage rescue scheme whereby we sell our home to a housing association and rent it back.

The LA were here yesterday as they have to confirm that our home is in good condition etc and he never said anything about this.

 

 

We have a possession claim being heard in 2 weeks time and now will have no extra payment being made so wont be able to make an offer of any kind.

 

We didn't receive a letter either the first time I was aware of the changes was when I got a letter of intention to repossess by MC and worse than that DWP just stopped paying period with no notification AT ALL they've apologised but this isn't stopping the warrant to repossess because we've already been to court twice.......

[dehowletts]

Does anyone know how the amounts of SMI are worked out please? i.e the actual mathematical formula they use??

 

e.g. (£yyyyyy x zz%) / 52 = £x weekly amount

 

because I've had SO MANY instances lately where people have got their basic maths wrong I getting a 'thing' where i feel the need to check everything

 

if not can you request the calculations used from the DWP because whilst they (sometimes) send you a letter telling you the amount it's never broken down

[andydd]

Does anyone know how the amounts of SMI are worked out please? i.e the actual mathematical formula they use??

 

e.g. (£yyyyyy x zz%) / 52 = £x weekly amount

 

because I've had SO MANY instances lately where people have got their basic maths wrong I getting a 'thing' where i feel the need to check everything

 

if not can you request the calculations used from the DWP because whilst they (sometimes) send you a letter telling you the amount it's never broken down

 

Good point, you may get more sense from your mortgage company than the DWP, although if you write to the DWP you may get a response telling you how it's calculated.

 

Andy

[sparky1966]

Hi all it would be interesting to find out how much affect this cut has had to guys on this site

in my own circumstances it has left me with severe arrears on my mortgage and with the payments to stop within 2 years what does people do then mortgage companies will only work so much with you and of course halifax rates has just risen so what now

[andydd]

Hi all it would be interesting to find out how much affect this cut has had to guys on this site

in my own circumstances it has left me with severe arrears on my mortgage and with the payments to stop within 2 years what does people do then mortgage companies will only work so much with you and of course halifax rates has just risen so what now

 

Howdee.. At the time I was interviewed my mortgage was 5.8% or something, a fixed rate, luckily it was just coming to the end of that and went onto the standard BoE +2% rate so that wasnt too bad, shortly got a job after, although its due to end this summer.

 

Andy