Can I use my savings to pay off some of my mortgage, and then claim benefits?

[BzzzzzOff]

Well aware that I'm about to get flamed for this, but I am fed up with being penalised for being responsible with my money.

DH and I have £30k in savings, which was intended to go towards our next house when the DC start school and I go back to work. Currently I am a SAHM with two toddlers, and DH is on a low income (£24k). We just about manage without needing to dip into our savings, but from next year they will start depleting pretty rapidly as our energy fix comes to an end.

I know how lucky we are to have plenty of savings, but I am really upset that if we'd been reckless and bought the bigger house before having children then we could be on benefits now and receiving all this extra help. As it is, we'll probably never be able upsize as our savings will be gone.

So, I think I'm going to stick £25k onto our mortgage, keeping £5k in the bank, and start claiming Universal Credit. Could this be considered deprivation of assets? Frankly don't care if this is "immoral", I am just wondering how careful I need to be in order to protect the savings I worked so hard for.

Similar position, always been a saver but you do feel what is the point! Don't blame you at all. Be interested to see how you get on.

Who the hell are you to judge OP? so benefits are only for people who fit your criteria? Not sure you're in any position to judge.

Why would she need childcare? She has a partner. Hospitality and social care are crying out for people, I’m confident she could negotiate hours to suit to fit around their job.

unless you really think the first and only option is to conspire to defraud the social system?

@Reallybadidea The whole tone of the OP stinks of resentment.

No, benefits are for who fit the criteria - not intended for those who smush their way into it.

@railwaysleepervegpatch What?

I was referring to the OPs tone; it stinks of resentment and she’s aiming it at the wrong people. I’m in the same position as the OP to judge.

I am really upset that if we'd been reckless

right there in the first post. Second to last paragraph.

I don’t mean to be rude but I would find this immoral. Benefits are meant to be for people who need them not people who have £30K in the bank. If you have toddlers then it can’t be long until they are eligible for some free hours at nursery so I don’t see why you can’t go back to work? I get that it’s hard, I work full time and have a toddler myself, but I don’t see why the taxpayer should support you day to day just so you can keep your money for a bigger house. runs for cover

It would be considered deprivation of assets. And why should others subsidise you - we could all do this to reduce our savings but that would help no-one in the long run. It's selfish.

Be seen as a deprivation of capital so no.

The inequity of the benefit ‘system’ causes huge resentments - I know 2 people who choose to work 2 days per week and top up with UC - one is a single mother who has an disposable income with benefits of £25.000 +( no rent and full child benefits) conversely my daughter works 40 + hrs as a teacher and she has ( after childcare mortgage etc) nowhere near that disposable income - ☘️👍🏿☘️

When I claimed UC, the savings threshold was £16,000 so it might be worth checking what the current threshold is.

I didn't think you could claim UC if your assets was over 16k?

@eveoha I agree it causes huge resentment (already there are threads like this on the boards so soon after the budget spewing from resentment).

The problem is, the genuinely disabled or unable to work are thrown in to the pit with the small percentage of people who play the system. It is soul destroying to know that this is what people think of me both in wider society and even from my own family or friends.

I took issue with the OPs use of the words “penalised for being sensible” , “reckless” and “money I’ve worked hard for”. OP had a genuine question but it was worded full of spite and aimed at benefit claimants.

I’ve never once been asked years ago for any bank statements just asked what my savings were I don’t claim now but pay a chunk off your mortgage if they ask why say because you were struggling with the payments and claim before it gets eat up paying extra living costs

@BzzzzzOff i thought it was under 16k to claim?

either way, totally support you doing it (though I know you weren’t asking for approval!). Practically I would be careful. Can you not put it anywhere else ie to repay a debt to a parent or similar? I didn’t know DWP would check these things but if they do I would be careful putting it all into mortgage then claiming straight away… that said, I suppose you could always say it was done due to cost of living crisis and ensuring you could meet payments if interest rates go up.

Thanks for all the responses, I thought I'd get burned at the stake so it's refreshing to see that others do get where I'm coming from.

Just to clarify my use of "reckless":

I am Person A - I knew I wanted to be a SAHM so I budgeted accordingly and we accepted we could not upsize until later on, as we could not do that and remain self sufficient.

Person B, on the other hand, decided to buy the bigger house anyway (or piss it up the wall on holidays and cars, whatever), despite knowing that they'd struggle if they wanted to have children and would probably need to claim benefits.

It really annoys me that Person B has their big house / new cars but is now eligible for benefits. But because I chose the sensible option, I will now lose my savings and never have the things that Person B recklessly splurged on.

I'm not putting this very well, but I am absolutely NOT saying that all/most people on benefits are reckless. Not at all. However, I really hate how the current system pays out for those who ARE reckless. I know a couple of Person B types and I'm afraid that yes, I do feel rather resentful about it.

@SmashedTit i don’t think that’s what the vast majority think. I think it’s more that if you have small savings around this figure then you are forced to use them when you may not have bothered at all. The government is benefiting from @BzzzzzOff ’s efforts to save. I don’t think it’s a comment against anyone claiming benefits in general, more that the government shouldn’t expect someone with such small savings to use them up when hard times hit.

The question of benefits aside, with a decent amount of savings, it's likely to make sense for you to overpay on your mortgage now and to pay off a lump sum (so long as you're not being penalised for it), because of the combination of rising interest rates on the loan itself and rising inflation meaning your savings will get you less anyway. It's good to have savings to cover emergency expenses (say if your roof gets damaged and the water leaking into your house means you need to replace the floors), but it seems like at least 10k of it would serve you better on the mortgage right now than in the bank account.

You are moving one asset into another. If you added up all your assets and deducted your liabilities you’d still have the same net result. It’s changing a liquid asset for an illiquid one but no deprivation has occurred.

If the government want to make silly rules that’s on them. You crack on OP you’d be doing nothing wrong.

Theres no need for this comment is there. Is she saying shes going to waste her 30k on rubbish? No! Shes saying shes going to pay it onto her mortgage

No need for your nasty pity party comment. It's unfortunate you have a chronic illness but that's not the OP's problem or fault

what the hell are you talking about!?!

Regardless of benefits why on Earth have you been in effect borrowing £25000 and paying interest on it rather than putting it in the mortgage?! It’s a silly way to manage your money.

I’d put 6 months money in a bank account (£12k in your case) and the rest in the mortgage. Watch your spending at at the end of each month transfer the balance ideally into the mortgage but otherwise into savings to be added to mortgage later depending on terms. Consistently overpaying your mortgage will massively change your final wealth.

Firstly, you were mad to think 24K would support four people.

Secondly, any UC you do manage to claim will come with commitments - like finding a job and working X amount of hours.

So get off your arse and get back to work like most of us have to. 24K and want to be a SAHM? As if.

I actually think the £16k max savings should be raised, I don't think it has been raised in about the last 25 years.

There was someone on here recently who was unable to work but who had an inheritance it wasn't enough for her to buy outright it just seemed so sad that money that could make her life so much better and pay for luxuries over a very long period of time was going to result in her benefits being stopped and her having to use it for day to day living.