Support for mortgage interest query.

[Deimos]

Hi all, I have a question for someone, if you'd be so kind.

 

Regarding support for mortgage interest, how much of the interest on a mortgage does the scheme cover?

 

For instance, let's say there's three people on an interest only/capital mortgage, the mortgage is 137k, all the people are now on benefit due to sudden illness/sickness

 

Let's assume for the moment the mortgage costs £650 a month, half of which is interest only, so £325.

 

Would the government cover the entire £325?

 

Also, if the mortgage was interest only, would they cover the entire amount?

[bluedogx]

It used to be around 6.8 % now it's just over 3% interest they pay

[Deimos]

Yes, so if our mortgage was interest only, at 3.X percent and cost us say, £300 a month, would they cover the full amount?

 

(I/We are NOT trying to rip the government off, we're just in a state where we need help, or we'll lose our home)

 

Assuming we kept our current interest/repayment mortgage, I assume the mortgage company would still insist we pay the repayment right?

[Nystagmite]

You can claim for interest up to £200k of your mortgage. They currently pay 3.63%.

[Deimos]

Righto, thanks

So the mortgage company is still going to expect us to pay the other half, right? (The repayment?)

My dad seems to think not, which I find a bit odd.

[Nystagmite]

You would be expected to pay any excess.

[Deimos]

Yea, I thought as much

So I guess it'd be best to switch to an interest only mortgage at this rate, right?

[daisy lighter]

They will pay about £414.00 a month for you. I'm fairly sure that will be for the whole household, not per person.

 

If it were per person you could end up in a situation where you were making over £600 a month over payments on your mortgage.

Are there 3 people named on the mortgage?

[Deimos]

There's three names, yes

We want to get one of the names removed at some point, as he hasn't been paying his share of the mortgage

So I'm thinking we should switch to an interest only mortgage for £137,000 for the time being, until both of us are well enough to work again

[leemack]

If there are three names on the mortgage then the dwp will only pay a third, I believe - so each person needs to claim mortgage interest for their third - except if two of the people are married or partners, then their one income based claim would cover two thirds and the other person would need to vlaim their third.

 

Not sure I've explained that very well.

[Deimos]

Yea that's what we found out just recently

I was the only claimant, my dad didn't realise he could claim, as he currently gets pension credit, so he claimed a week ago (Hasn't had confirmation or whatnot yet, but he did get the application to take to the mortgage company)

Uncle (the idiot who we want removed) also claimed, as he's currently claiming disability/sickness, despite working for cash in hand.

[Deimos]

And before I confront my father tomorrow, can I just confirm, once again, IF the government covers the interest part of our mortgage, the mortgage company will still expect us to pay the repayment part, correct?

 

For some reason my dad is of the belief that if we have the interest part covered, the mortgage company won't care about the repayment.

[daisy lighter]

It is only the interest paid.

What interest rate are you on? If less then 3.65% you will be covered for the interest portion of the mortgage.

Have you spoken to your lender about changing to IO?

[leemack]

no, your mortgage repayment is arranged between you and the mortgage company - if there's any shortfall after the mortgage interest has been paid by the DWP, then you have to make up the difference.

 

Some mortgage companies may be prepared to allow reduced payments for a period of time, or allow you to rearrange what you pay. But you would need to contact them to find out.

[daisy lighter]

I did say that if the rate was below 3.65 it would cover the Interest Only portion of the mortgage. If Adams rate is higher than 3.65 he will have to cover the excess even on an interest only mortgage. Thats why I asked what the current rate was.

 

The FSA have said that lenders should allow changes to mortgages for customers in distress although I know that some lenders are very awkward about this. Some have stipulations regarding the equity amount eg if the loan to value of the mortgage is more than 70% they will not allow the change to Interest Only payments.

Edited April 30, 2011 by daisy lighter
spelling

[leemack]

I did say that if the rate was below 3.65 it would cover the Interest Only portion of the mortgage. If Adams rate is higher than 3.65 he will have to cover the excess even on an interest only mortgage. Thats why I asked what the current rate was.

 

The FSA have said that lenders should allow changes to mortgages for customers in distress although I know that some lenders are very awkward about this. Some have stipulations regarding the equity amount eg if the loan to value of the mortgage is more than 70% they will not allow the change to Interest Only payments.

 

Sorry are you responding to my post - we posted close together and my post was in response to Adam's not yours. I was simply stating yes he would have to cover any shortfall between whatever his mortgage payment was and the dwp interest payment - and yes, regardless of the type of mortgage deal. I wasn't contradicting you - we're saying the same thing.

[daisy lighter]

leemack

 

I am still learning forum etiquette. Didn't mean to be rude.

[andydd]

In my situation, my lender agreed to accept interest only for a period, this was reviewed on a 3 montly basis. I inititially got the higher 6% rate which covered the interest and some of the repayment, then it changed to the 3% rate (its not fixed its based on average or BoE rate plus something%), luckily my mortgage reached the end of its 5.5% fixed period and fell onto the lenders 2.5% rate so I wasnt too badly off.

 

Found a job since then, so problem solved (for a year anyway !).

 

Andy

[Deimos]

Thanks all

[Deimos]

To answer your questions, I'm not sure what interest rate we're on, but it IS the lower amount, our original 6% ended back in October, so I "think" it's 3.5%ish.

[leemack]

leemack

 

I am still learning forum etiquette. Didn't mean to be rude.

 

No problem catflap, you weren't rude.

[andydd]

To answer your questions, I'm not sure what interest rate we're on, but it IS the lower amount, our original 6% ended back in October, so I "think" it's 3.5%ish.

 

Well..be sure to contact them straight away and find out and tell them the cirtcumstances, keeping them informed is key to sortting it out.

[Deimos]

Yes, we're going to ask the third mortgage sharer if he agrees to move out, we'll cover his 3k of arrears he's racked up, then we'll go to the mortgage place first thing monday to try and remortgage (or switch to an interest only one)

[Nystagmite]

Monday is a Bank Holiday - so you may need to wait until Tuesday.

[Deimos]

Duh, yea