Support for Mortgage Interest ***WON***

[terrypc]

Can anyone shed any light on this please...?

 

I am on JSA © after a rapid reclaim following a recent temp job. DWP have refused SMI on my mortgage as it is on a Buy To Let mortgage.

 

On previous claim in Nov 2010, they paid my mortgage but may not have known about the BTL mortgage status.

 

Nowhere in any regs can I find reference to business loans where A) I was never a business (my kids lived in the house in their 20's) and I never had a company or anything or made any profit. B) It is my sole and only home since I moved in in 2005 after being forced to sell my family home due to difficulties with an ex partner. My lender knows this and has not raised any objections as I have paid my mortgage all ok on it (until now!).

 

I think the DWP are making it up.

 

Does anyone else know of this sort of thing?

 

Thanks

T

[SueP1944]

Can anyone shed any light on this please...?

 

I am on JSA © after a rapid reclaim following a recent temp job. DWP have refused SMI on my mortgage as it is on a Buy To Let mortgage.

 

On previous claim in Nov 2010, they paid my mortgage but may not have known about the BTL mortgage status.

 

Nowhere in any regs can I find reference to business loans where A) I was never a business (my kids lived in the house in their 20's) and I never had a company or anything or made any profit. B) It is my sole and only home since I moved in in 2005 after being forced to sell my family home due to difficulties with an ex partner. My lender knows this and has not raised any objections as I have paid my mortgage all ok on it (until now!).

 

I think the DWP are making it up.

 

Does anyone else know of this sort of thing?

 

Thanks

T

 

You have me confused. You are trying to claim SMI on a mortgage that was used to buy an investment property which by it's definition was a 'buy to let'. You then say that you live there and that it is your only property/home and that it always has been.

 

If so, how can it be a buy to let mortgage if you are living in it yourself and from what you are saying, you have always lived in it. The two just don't go together.

 

There is a difference between a mortgage taken out to purchase your only home, and a commercial mortgage taken out to buy an investment property which is to be let out.

 

The criteria used to obtain these advances is totally different than if it was a tradional mortgage. The advance is made on the rental return the property will make.

 

I do wonder if you have taken out a 'buy to let' mortgage to buy your home instead of a traditional mortgage. If so, I cannot see how you would have managed that if you never had the intention of letting it out. This is sailing very close to mortgage fraud!

 

I must agree with the DWP, they will not support a mortgage that was obtained under the guise of it being for the purchase of a investment property and not your own home.

It's like borrowing money from a bank saying it was for the purchase of a property in say France (second home), but using the money to buy your own home in the UK instead.

 

Something or someone has been telling porkies here and certainly your bank are involved in it as is your solicitor!

 

More than one person has done time in HMP for telling the bank one thing but actually doing something totally different with the money.

 

On the other hand, you appear to have owned two houses. The martial home and this one. It maybe that it was always an investment property and that you have moved in because the martial home was sold.

 

Either way, it is a commercial mortgage for a commercial enterprise and that you might now have taken up residence as you have nowhere to go. SMI is not paid for commercial loans, nor indeed for an ordinary unsecured loan from a bank even though it was used to buy a home. It has to be a recognised secured loan for the sole purposes of acquiring your home or purchasing an interest in it.

 

You will only get help towards mortgage interest payments for a mortgage or loan to buy or improve your home. SMI is normally paid directly to your lender. There is no guarantee that you will get SMI for a loan you take out.

I would tread very carefully here if my assumptions are right and that is what you have done.

Edited March 29, 2011 by SueP1944

[onestressedwoman]

Can anyone shed any light on this please...?

 

I am on JSA © after a rapid reclaim following a recent temp job. DWP have refused SMI on my mortgage as it is on a Buy To Let mortgage.

 

On previous claim in Nov 2010, they paid my mortgage but may not have known about the BTL mortgage status.

 

Nowhere in any regs can I find reference to business loans where A) I was never a business (my kids lived in the house in their 20's) and I never had a company or anything or made any profit. B) It is my sole and only home since I moved in in 2005 after being forced to sell my family home due to difficulties with an ex partner. My lender knows this and has not raised any objections as I have paid my mortgage all ok on it (until now!).

 

I think the DWP are making it up.

 

Does anyone else know of this sort of thing?

 

Thanks

T

 

? 56 week rule ! If you start work and it doesn't last it is then classed as a continous claim ! so therefore it's just the same claim.

 

However I don't know of any legislation on BTL ? If your elder children were living in the house and they were working that may have excluded you from the benefit in the first place -

 

Without knowing of the legislation the only recourse you have at this point is appeal to be transfered to the Tribunal service you never know they (DWP) may change their position lol before it goes to the tribunal

 

I did find something on line the other day giving details of cases that were sent to tribunal in all different circumstances and their outcomes but will have to look again to find it for you -

 

One instant in this document was a woman with 12 children rented two houses side by side intitally refused housing benefit on both as she had 2 different landlords but won appeal as husband had knocked through an adjoining wall Judge said that she could be awarded both as she was occupying both !

 

Document covers All manner of Housing payments SMI & Housing benefit - I'll try to find it

[terrypc]

I posted a long reply but it disappearred! I shall try again.

 

Fraud?? I hope not! I bought the BTL house for my daughter and her three friends to live in. they all paid equal rent and no problems. After 6 months my son (aged 17) wanted to move in, so he did. Where's the fraud?

 

I moved in after my ex took me to court for £30,000 his "interest in the property" of my family home. I had to sell family home to pay him off. I had nowhere to live, could not afford anything with the £50,000 profit from sale so moved into the BTL and used the money to reduce the mortgage. Daughter moved out to get married, son remained. I told the lender then and since and requested they change my mortgage to a normal mortgage, they refused. They have been ok about me living there.

 

DWP regs state that a family can claim housing costs where the person liable cannot pay the mortgage (me). That means my son on JSA can claim housing costs anyway . I don't want this -- perhaps DWP will make an exception as common sense should prevail here. I am stuck!! Can't move or get a job and now have appealled (based on a few arguments about being entitled to housing costs however that home was purchased, being the over-riding factor).

 

I shall carefully look at any info you put my way as I cannot find regs that state that DWP will NOT pay on a business loan. It talks of loans to buy a home, loans to purchase an interest etc etc.

 

Am I supposed to move out (and my son) let it out and go claim HB (probably impossible) for a rented place?? Or present as homeless, when I have a house already!! The trouble is, its not a business, its a house and by definition someone has to live in it! And if the owner is (for arguments sake) potentially homeless then...???

[terrypc]

I posted a long reply but it disappearred! I shall try again.

 

Fraud?? I hope not! I bought the BTL house for my daughter and her three friends to live in. they all paid equal rent and no problems. After 6 months my son (aged 17) wanted to move in, so he did. Where's the fraud?

 

I moved in after my ex took me to court for £30,000 his "interest in the property" of my family home. I had to sell family home to pay him off. I had nowhere to live, could not afford anything with the £50,000 profit from sale so moved into the BTL and used the money to reduce the mortgage. Daughter moved out to get married, son remained. I told the lender then and since and requested they change my mortgage to a normal mortgage, they refused. They have been ok about me living there.

 

DWP regs state that a family can claim housing costs where the person liable cannot pay the mortgage (me). That means my son on JSA can claim housing costs anyway . I don't want this -- perhaps DWP will make an exception as common sense should prevail here. I am stuck!! Can't move or get a job and now have appealled (based on a few arguments about being entitled to housing costs however that home was purchased, being the over-riding factor).

 

I shall carefully look at any info you put my way as I cannot find regs that state that DWP will NOT pay on a business loan. It talks of loans to buy a home, loans to purchase an interest etc etc.

 

Am I supposed to move out (and my son) let it out and go claim HB (probably impossible) for a rented place?? Or present as homeless, when I have a house already!! The trouble is, its not a business, its a house and by definition someone has to live in it! And if the owner is (for arguments sake) potentially homeless then...???

[SueP1944]

Now I understand what you are talking about.

 

So this was an investment property, you borrowed the finance via a commercial/business loan/mortgage. The idea being that the rent from the children would cover the repayments leaving the property to hopefully increase in value. So far, a good bit a family and business planning.

Ok then the matrimonial house is sold to pay off your ex leaving you with capital which you used to reduce the debt on the investment property. Then having nowhere to live, you move in with your son into the investment property.

 

Now comes your question - is SMI available to cover this mortgage?

 

Having done a hell of a lot of researching on this particular subject, nothing would surprise me anymore.

 

I too cannot find any regulation that offers advice as to what is and what isn't allowable. All I can say is that the DWP have a specialist department that deals with SMI requests. They seem to me (well the decision in my case clearly shows that they do) to stick rigidly with what the law says:

You will only get help towards mortgage interest payments for a mortgage or loan to buy or improve your home. SMI is normally paid directly to your lender. There is no guarantee that you will get SMI for a loan you take out.

I can forsee a problem in them allowing the claim as it was never the intention when you took out the loan to be your 'home'. You already had that elsewhere.

They look at what the intention was when the advance was made, not what has subsequently changed.

 

Look at it this way, if you had not sold the matrimonial home and had have sold the investment property instead, then you would have been OK as the mortgage you had on that property was clearly for the purchase of your home.

You can only have one home for SMI purposes.

And it's no good remortgaging the current property to make it seem a home loan, as they go right back to the first transaction when you acquired it.

 

I will stand corrected on this one, but to give you an idea on how I lost out. I bought our current home via an unsecured personal/bank loan. When the mortgage came through some weeks later, the loan was paid off with the proceeds of the mortgage.

Because the home wasn't bought with a mortgage but an unsecured loan(unsecured being the operative word) in the first place, my name appears on the deeds at Land Registry for about 4 weeks as the owner with no secured charge in place. The mortgage was treated as equity release for which SMI is not payable even though it was used to fully discharge the earlier loan.

 

So they do seem to stick with the law very closely. (In my case what is the difference between an unsecured personal/bank loan and a secured mortgage? I used the loan to buy the house, all I did was exchange one debt with another).

 

In the meantime I will have a dig through the Regulations and see what I come up with for you.

Edited March 30, 2011 by SueP1944

[terrypc]

That's very kind, thank you!

 

I have contacted Community Legal Service and Shelter and they have not responded to me. They have confirmed my enquiry. it is being looked at. I have asked DWP for a full statement of reasons requesting they cite the relevant Acts their decision relates to - so that should flush them out.

 

A Housing friend of mine says that he dealt with a case where the HMRC (yeah different body) ruled that a woman did not have to pay tax on rental income from her BTL property she lived in as it was her home and not classed as a business from the moment she moved in. One would hope the govt don't just change the goalposts between departments as it suits them! But they seem to.

 

Your loan issue is blatantly stoopid! In tut old days people often got bridging loans to move between properties where for example one had to move to a new location for work before old house sold. Are they saying they would not honour these? Forever, if it came to it??

 

It's not easy being nearly 50 and being cynical about having any live-in relationships ever again (or a career after 20 yrs service for this country)! but I digress.

[dehowletts]

I would say in the interim of trying to work out which bits are applicable to you contact Shelter because whilst many people associate them with the homeless one of their main objectives is the PREVENTION of peeps becoming homeless in the first place & many people are unaware of this, their knowledge is vast & you never know they may be able to do something on your behalf.

 

http://england.shelter.org.uk/get_advice/paying_for_a_home/support_for_mortgage_interest this is a q&a relating to homes in England (just go back to the homepage for Ireland Wales & Scotland) & might help answer some of your q's

 

[terrypc]

Hi

 

Just to update on my SMI/JSA/BTL problem.

 

Shelter were unable to help as it's "beyond their expertise" (shocking!)

 

Community Legal have offered assistance once the DWP have responded to my request of full statement of reasons for turning down SMI on a Buy-To-Let mortgage.

 

Mortgage lender has now issued intention to proceed with legal action for repossession. Lender won't hold off pending appeal (I have 10 weeks arrears, started JSA 8 weeks ago). By the way, the SMI "waiting period" of 13 weeks already served on a previous linking claim from Nov.

 

Any idea how long the DWP might take? Any ideas/suggestions for my situation? Can't let out the place as I'd have nowhere to live and not get HB, can't sell a I'd then be over-capital for HB. I'm assuming the worst job-wise as I had a breakdown 18 mnths ago and have been on JSA 8 months with an 8 week spell of working where I started to get ill again. Not ill enough for an ESA claim though (except after about 3 weeks of working, then things start to go wrong badly). Doctor has advised part-time work, but doesn't pay the bills! Thought of letting out my spare room but uncertain about JSA repercussions (I think they'd take most of it away, leaving me £20 a week extra which might not cover the lodgers costs of electric etc).

 

Any comments gratefully recieved.

!

[Life-Goes-On]

If you had £50,000 and used it to part pay your mortgage I'm surprised you haven't been investigated for deprivation of capital.

 

You claim you can't sell as then you would have to much money to claim HB, I'm sure many here would love that option

[terrypc]

The £50,000 was 7 years ago!! Long before I lost my job through stress 1 year ago! The deprivation of capital rules would stretch to Strasbourg if this were law!

 

I'm on my own at nearly 50, so selling my house and spending the equity (because I could not afford the £600pm rent and work) is just so not a good idea. I think if you are expecting the unemployed to sell their houses and live off that instead of claiming bens - then what sad country is this. I've worked 20 years with some of the most deprived people in this country, your elderly, suicidals and violent ex-offenders - that's why I'm now burned out. I'm no slacker, I've been trying to keep this country going since 1991!

[Life-Goes-On]

Soz, when reading your posts it came across as a short period, as no time frame.

 

Your mortgage lender seems very inflexible, have you taken any advice about it?

[onestressedwoman]

Hi

 

Just to update on my SMI/JSA/BTL problem.

 

Shelter were unable to help as it's "beyond their expertise" (shocking!)

 

Community Legal have offered assistance once the DWP have responded to my request of full statement of reasons for turning down SMI on a Buy-To-Let mortgage.

 

Mortgage lender has now issued intention to proceed with legal action for repossession. Lender won't hold off pending appeal (I have 10 weeks arrears, started JSA 8 weeks ago). By the way, the SMI "waiting period" of 13 weeks already served on a previous linking claim from Nov.

 

Any idea how long the DWP might take? Any ideas/suggestions for my situation? Can't let out the place as I'd have nowhere to live and not get HB, can't sell a I'd then be over-capital for HB. I'm assuming the worst job-wise as I had a breakdown 18 mnths ago and have been on JSA 8 months with an 8 week spell of working where I started to get ill again. Not ill enough for an ESA claim though (except after about 3 weeks of working, then things start to go wrong badly). Doctor has advised part-time work, but doesn't pay the bills! Thought of letting out my spare room but uncertain about JSA repercussions (I think they'd take most of it away, leaving me £20 a week extra which might not cover the lodgers costs of electric etc).

 

Any comments gratefully recieved.

!

 

Phone your mortgage lender and DONOT speak to collections !

 

Insist on speaking with their customer relations manager ! If you only have 10 weeks you may still qualify for home rescue scheme via your mortgaged provider (however leave this question till the very last moment ! Explain you are waiting on DWP there is only a 9 week waiting period now so if they sort it out then you probably only have a week to wait if you are entering an appeals process it will take considerably longer !!!!! Don't go into too much detail about problems you are having on qualifying only that you are waiting on DWP.

 

(Only one week to go till entitlement if they are clasing it as a new claim ! if they class it as a continuous claim then your arrears should be satisfied so keep your fingers crossed)

 

If you are awaiting appeals tribunal then harrass DWP into forwarding paperwork to tribunal then when they have the papers phone tribunal and explain the urgency they can often bump you up the list !

 

Other than home rescue scheme via mortgage provider your local council should also be giving this service they can pay any shortfall until which time your re employeed but they want to see you can get back into employment

 

Get the Manager of DWP mortgage sections direct telephone number and have a latteral conversation with him/her

 

I'll repost if I can think of anything else (Community legal advice in my case proved to be usless at assisting)

 

Good Luck !!

 

OSW

Edited April 14, 2011 by onestressedwoman
added text

[terrypc]

Thank you!

 

I think the Mortgage Rescue Scheme exempts BTL mortgages. I will check again.

 

Not sure about entitlement period of 10 weeks you mention, is that for Mortgage Rescue Scheme?

 

Not sure how the council could help as I don't qualify for HB?? Please flesh out if you can.

 

Thanks!

[terrypc]

Have checked and I don't fit the criteria for mortgage rescue or homeowner scheme. My lender isn't on the homeowner scheme.

 

I'll speed up the rest though.

[onestressedwoman]

As far as I know or have been told (reliable source) mortgage providers have scheme where by the can agree to reduce your payment by up to 70% until which time you can get your self straight this can be applied to your account for up to 2 years - Although they don't advertise this I'll try and dig out contacts number that gave me details for you !

 

You will receive a letter from your local authority (as they will be informed of the intention to reposess) The will offer you three options and depending on their criteria they will offer you one of the 3 -

 

1. They buy your house and rent it back to you ( in my case no chance)

2. They will agree to cover the short fall if you can prove you can get back into work and have potential to get back into a position to pay the whole required monthly payments (have your figures ready before you go.

3. I can't rememer !

 

Even if you can't get any assistance other than No. 1 they can speak to your provider and tell them that you are applying for No.1 and that way the mortgage provider holds back !

 

I was very worried about going to them but actually the lady was quite nice and offered me support while I was trying to sort things out It's always good to have a sounding board !

 

RE: Qualifying period This use to be 39wks after you lost your job it has now been changed to 9 weeks !

 

If you can get them to agree it is a continous claim then it will be paid concurrently !

If not your entitlement will run from week 9 - if it is to run from this time you will be allowed £200k taken into considertion instead of the 100K as it was before although this is only runs for 2 years -

 

I am of the opinion you are going to get nowhere with DWP and if you get put into their appeals sytem you will be way at the bottom of the pile because it is not a clear cut case - To speed this up you have to go to your MP and get him to contact them he'll speed it up - If they dither at DWP and keep you waiting then insist it is sent to the tribunal

 

Get your paperwork ready all of the previous paper work showing they were previously paying it including entitlement letters copies of mortgage statements to show payment was being made - Then its belt and braces

 

I hope you get on well

 

OSW

[terrypc]

Just to let everyone know that my appeal for the DWP to pay my Rght To Buy mortgage won.

 

Essential facts of the case:

 

- I live in my property myself and it is my sole home for a number of years.

 

- The mortgage was taken out to buy the property in order to have tenants but I subsequently moved in and resided there ever since.

 

So both conditions of the SMI are satisfied. If you need any details of my argument/points to them, just say.

[andydd]

Interesting, I assume the DWP assumed/argued that as it was a Buy To Let that you lived elsewhere.Andy

[terrypc]

Hi! No they refused initially as it was the type of loan - they classed it as a business loan. I've seen others have issues with secured loans and other financing products used to purchase their home, that the DWP has turned down paying for mortgages.

 

One point of my case I relied on what that it is no longer a business as this was superceded by my own need for a home. At the point of moving in, the RTB mortgage changed in nature to a residential as I was living there, even though my lender would not alter it.

 

The DWP initially said I should apply for a residential mortgage and reclaim SMI!! What, on JSA?? lol

[citizenB]

This is good news for you terrypc, well done for sticking with it.

[terrypc]

Thanks. I've posted on here as at the time (March 2011) no one on here could help me so I managed to speak to a Shelter benefits lawyer in London (I was going to court to be repossessed by my lender pending DWP decision which took 5 months!). The Shelter lawyer had never dealt with any RTB SMI cases so no case law to go on. So I fought on with it.

 

Thought I'd just add this to the knowledge base.

[ANDYANDFLO]

Because my mortgage was late coming through and I was in danger of losing the house, I borrowed privately (2001) (unsecured) to purchase it. When the mortgage came through two week later, I repaid the private loan in full.

 

Now I'm out of work, and over 60 I claim Pension Credit top up. I tried to claim for the mortgage interest, but they refused it on the basis that I already owned the house for two weeks before the mortgage was paid out. Therefore treated as Equity Release!

 

I always thought that with equity release you got some cash back in your hand out of the value of the house. I never did, I repaid one loan with another and never saw a penny.

They then said that the first loan (the private one) was neither a secured debt on the house and had no need to repay it out of the mortgage money - that was my choice!, nor was it classed as a 'mortgage' in their eyes.

 

 

So out of my £210 a week, I have to find £385 mortgage interest every month!!

[terrypc]

Hi AndyandFlo

 

Have you appealled? Or taken any legal advice?

 

I would say this:

 

The material faxt of the case is that the mortgage you have IS for your curent home, where you live, never mind any previous finance. Therefore you are entitled to SMI, They are splitting hairs and trying it on.

 

It matters not whether you owned or did not before you claimed Pension credit - that is the material question. As you already had the mortgage and the house before you got Pension Credit, then I'd say you have a good chance.

 

Also, if the huse is in your sole name and you have ohers living there who are also in receipt of any benefit, they can claim for YOUR MORTGAGE under the housing costs regs. To prevent their homelessnes, the DWP has to pay any mortgage costs that the owner of the property cannot pay as long as both are living there. This is worth a try.

 

It all depends on whether you have appealed or missed the 28 day deadline.

 

If you missed the deadline, you can re-apply for SMI and then appeal on their decision of turning you down.

 

I was a benefit advisor before having to stop work.

[terrypc]

Also the property can't possibly be an Equity Release if you still own it! The releasing company would own the title deeds if that were so and you would have had the capital.

 

Also you would probably not have been able to afford to pay back the loan plus mortgage each month - and I expect can prove it!

 

If you can make a case that you are being treated unfairly and under Human Rights Act they are not treating you in line with someone who had a mortgage right from the start, they should buckle. Otherwise they can go back 30 years to when we had money and say that we should have forseen our situation and saved up accordingly - which we haven't got to yet, thankfully.

 

Also mention that Housing Benefit rent for a place to live if you were repossessed would undoubtedly cost the taxpayer more - like £600 per month!

 

I threw the Acts, statutory Instruments and everything at them to prove that I was entitled.

[Nystagmite]

So out of my £210 a week, I have to find £385 mortgage interest every month!!

 

No different to someone working full time then!