Monday, Sep 20, 2010
More repossessions in the pipeline?
MSE: URGENT Changes to Morgage Interest Support
I'm not sure if it's bad form to link to other forums but thought this was worth highlighting. Seemingly a fair few people hanging on by their fingernails, complaining that the government should be offering more support. A perfect storm brewing.
Posted by sibley's b'stard child @ 03:54 PM (1783 views) Add Comment
18 Comments
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1. charlie brooker said...
Yep, this was mentioned on BBC Breakfast this morning.
This combined with the likely hundreds of thousand of public sector job losses point to substantial house price falls.
We warned this would happen and they just pointed and laughed at us.
2. happy mondays said...
charlie brooker said...This combined with the likely hundreds of thousand of public sector job losses point to substantial house price falls.
You would think so? But they seem to always have another finger to plug up the Dyke! Excuse my terminology..
3. drewster said...
MoneySavingExpert is a respectable site, I see no harm in linking to their forums when it's on-topic.
Things would be worse (for unemployed homeowners) if Labour hadn't changed the rules in January 2008. Before 2008, the maximum loan you could claim for was £100,000; and you had to wait up to 39 weeks to start claiming; but at least there was no upper limit on the duration of claims. The new rules let you claim for mortgages up to £200,000, starting within 13 weeks of unemployment, but only for 104 weeks (two years).
The over-complexity of the tax system throws up some interesting challenges:
"I've thought about taking in a lodger, but that impacts on Council Tax Benefit and job-seekers allowance"
People failing to plan for the worst (and I'm just as guilty of this):
"When I bought the house I was in full time employment and was fit and well. I did not then think I would end up being physically disabled, having an illness and unable to work."
Signs of a shift to a renting-is-better mentality:
"There are also the worries which I would not have if renting - upkeep, repairs, annual boiler service, building insurance etc."
Unfortunately this is only anecdotal. We don't know how many people will be adversely affected by this; or whether the government will step in with yet another hare-brained scheme before repossession headlines hit the Daily Mail.
4. mark wadsworth said...
We own land! Give us money!
5. drewster said...
Correction - the rules changed in January 2009, not 2008.
6. dead spider said...
From post#52
"From 1st October they will only pay up to a certain percentage (3.68% ?) of the mortgage interest.
This means that I will be down approx £110 per month which is just under 10% of my income"
So this person has an income (net I'd guess) of over £1100 a month and still get's his mortgage interest paid by the tax payer ??????
7. drewster said...
dead spider,
No, that person explains it later:
"I didn't say my mortgage payment was less than 10% of my income - it is the amount that has been knocked of my mortgage benefit therefore I'm going to have to find it from my already tight budget."
Still not sure how that works out....
8. bystander said...
My rent is costing me 50% of my take home....where's my support??
9. This comment has been removed as it was found to be in breach of our Blog Policies.
10. drewster said...
Hang on, you can claim Income Support even if you're working up to 15 hours a week; and you can claim Support for Mortgage Interest if you're claiming Income Support.
I've used the online benefit calculator (http://www.direct.gov.uk/en/Diol1/DoItOnline/DoItOnlineByCategory/DG_172666) to calculate a typical example:
Single mother, aged 30, three children (two under 10), no illness/disability issues, working 15 hours per week 48 weeks per year on minimum wage of £5.93/hr, homeowner, no savings, £200,000 original mortgage with £150,000 outstanding, council tax bill of £1500/yr, spends £16.60 per week on a bus pass to get to work. Here's what I got:
£171.89 per week Jobseeker's Allowance (Income based) (I think this includes the Support for Mortgage Interest)
£143.01 per week Child Tax Credit
£28.77 per week Council Tax Benefit
£47.10 per week Child Benefit
£88.95 per week Earnings
=>
£479.72 per week Total weekly income
Extra help that may be available to you:
Free school meals, NHS Healthy Start Vouchers for children under four years old, Free NHS prescriptions, Free NHS dental treatment, Free NHS sight test, Vouchers towards the cost of glasses or contact lenses.
------------------
So there you go. Have a few kids, get a part-time job, and you too can have £479/wk tax-free, which is equivalent to a full-time salary of £33,300.
I urge all of you to try the DWP's Online Benefit Calculator and see what benefits you could get if you worked just 15 hours a week on low pay.
11. techieman said...
"The government needs to look at the whole issue of JSA Mortgages urgently, otherwise people are going to end up repossessed."
yes please increase taxes so that these people can have benefits for longer on properties which they cant afford. In effect we pay twice - once in taxes to fund such people and once because there is an artifical buffer under them, which supports inflated prices.
oh and what about this one:
"im sure there will be people lose their homes"..... but they arent their homes since they are encumbered.... why dont we just say well you bought you home if it appreciates and you are in a job carry on paying the mortgage, but if you lose your job or the IR goes up so you cant afford it any more - dont worry, dont look for a job , dont sell it.... because the taxpayers will pay the mortgage for you.
heads you win and er tails you win..
12. drewster said...
The Islamic finance system is a lot clearer in this respect. With an Islamic mortgage, the bank owns the house and is also your landlord; you pay rent to the bank (instead of interest) and you also buy the house bit by bit.
If people understood that when you have a mortgage, the bank effectively owns your house, then they might be more reasonable in understanding repossession.
13. novice pete said...
Wow, I used the benefit estimate calculator and it says I may be able to claim Working Tax Credit £52.08 per week, I only gave a rough estimate of my outgoings though, they may slightly more or slightly less.
14. novice pete said...
I never even knew there was such a thing as Working Tax Credit.
15. quiet guy said...
@novice pete
I'd never heard of the damn thing either. I was horrified when I looked into how it works - a loathsome buearaucratic mess in which we pay the governemnt our money then ask for it back through means testing.
16. mark wadsworth said...
Drewster, my favourite benefit is the 30 Working Tax Credit.
The government says that you get £1,920 Basic + £790 30 hour element = £2,710.
But to get this you must be working 30 hours a week, and your employer has to pay Nat Min Wage £5.80 per hour (assuming over 22 or whatever the age limit is) = £9,048 per year.
WTC are withdrawn at 39p for every £1 you earn over £6,420, so they take away £9,048 - £6,420 = £2,628 x 39% = £1,025.
If you earn £9,048 you also pay (about) £798 PAYE & Employee's NIC, and your employer pays (about) £517 NIC.
So you are given £2,710 but they take away £1,025 + £798 + £517 = £370. So in effect, the maximum you can possibly get is £418 a year.
Which divided by 52 weeks is about £8, or just enough to cover your bus far, if you're lucky.
17. drewster said...
MW,
This is why I voted Lib Dem - the £10,000 personal allowance would have simplified the tax system and reduced the "poverty trap" of 90% marginal tax/benefit rates.
The Working Tax Credit was one of Gordon's inventions, if I recall correctly.
18. mark wadsworth said...
Drewster, that is why I voted UKIP. They proposed a personal allowance of £11,500 and a Citizen's Income type welfare system.