Struggling To Pay The Mortgage
Independent Financial Adviser Peter McGahan advises whether income support can help if you are having difficulty meeting mortgage payments.
"I am in mortgage difficulty and wanted to ensure my mortgage payment is met. I have heard that I may be entitled to support after the income support for mortgage interest legislation (ISMI). Is this true?"
Peter advises:
An overhaul has recently been announced in order to help the vulnerable meet their mortgage payments. The changes are likely to come into effect in April 2009 but may change because as yet the government are not confirming if they are indeed final. However I will take you through the changes as we stand.
Currently at present only those individuals receiving Income Support, Pension Credit and income-based Jobseeker’s Allowance are eligible for ISMI.
It is intended that as of April 2009 the eligibility criteria will be extended to individuals who receive income-related Employment and Support Allowance.
If you lose your job today you have to wait 39 weeks before you receive any support for meeting mortgage interest payments. That waiting period will be cut to 13 weeks for new working age claims - for individuals aged 16 to 65.
There will be a capital limit for the maximum mortgage less arrears under which you can claim and that will be increased by 75 per cent to £175,000 for new working age claims.
There will also be a time limit of two years but this is for new Jobseekers allowance only.
This will not apply to existing claims or to new claims from those in receipt of Income Support, income-related Employment and Support Allowance, or Pension Credit.
If you are a pensioner getting pension credit, there's good news as you will not have to wait to get help and if you are in any special circumstances, you will have a shorter waiting time.
In your situation however you along with any claims until April 2009 will be treated under the existing system.
If you are struggling with payments, act quickly and speak to your lender, they are there to help you and take it from me do not want a portfolio of repossessed properties on their hands. Speak to them first. Do a budget planner. Stop unnecessary payments. Pay the important bills first, not those who shout loudest. The priority bills are those who can take legal action such as any loan secured against your house, rent, council tax, water, gas, electricity, unpaid fines, hire purchase, and of course your phone if you are reliant upon it.
Seek advice at the Citizens Advice Bureau before paying expensive legal bills, the staff are well experienced in the matter and are non judgemental as well as supportive. Finally speak to an independent mortgage broker who is prepared to give you an initial free consultation but also who offers you a fee option. This way you can be guaranteed they will not be motivated to 'sell' you a product.
Need Expert Advice?
Peter McGahan is an Independent Financial Adviser and Managing Director of Worldwide Financial Planning. Worldwide has won 16 Financial Times awards in the last four years.
Peter comments regularly in major journals such as the Mail on Sunday, Irish News and Sunday Times and is a weekly columnist for FT Adviser. He has also appeared on Working Lunch and the Today programme. In addition he is an expert on international tax matters for a range of international publications.
To ask Peter a question email connect@50connect.com, leave a comment below or visit the 50connect forum.
Worldwide Financial Planning Ltd are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made. The above represents the personal opinions of Peter McGahan. All information is based on understanding of current tax practices, which are subject to change. The value of shares and investments can go down as well as up.
If you have a financial query you would like Worldwide Financial Planning to respond to call 0845 230 9876 or for futher information visit www.wwfp.net.
Web Links
Citizens Advice Bureau: www.citizensadvice.org.uk
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