Mortgage and unemployment

[Pixxie7]

People who have been made unemployed because of Covid should be entitled to help with their mortgage if they have to go onto UC.

People should be forced to take out insurance to cover them if they can't pay their mortgage or rent due to unemployment or long term sickness

We all do, it's called national insurance. It pays our pensions as well.

The problem is that over the years the earnings limit at which it ceases to be payable hasn't risen in line with income, and the % rates haven't risen significantly either, so it no longer fulfills its purpose.

And successive governments have eroded the level of benefits to the point where they no longer meet people's needs, especially the cap on housing benefit at the bottom 30% of rents.

I would far rather pay into a properly managed state scheme than pay a premium to some company that's in it for profit. Look at the scandal of PPI, it would be the same old shite all over again.

And like PPs, I see no difference, ethically or otherwise, between the state supporting people to pay their mortgages and keep their homes and the state supporting tenants to pay landlords' mortgages and keep their investments.

If anything, the homeowners are more worthy of support than landlords. After all, we all know that generally the value of investments can go up or down.

During the recession of the early 80s, claimants could get the interest on their mortgages paid by benefits. This prevented loads of repossessions. By the recession of the early 90s, this had been abolished and repossessions and homelessness were widespread. At one point, Croydon County Court was dealing with 500 repossessions a week, and that's just one court. I'm very fearful that we may be heading there again, especially as interest rates are so low that they can only really go up.

I don't have a dog in this fight. I'm mortgage free and a few months away from retirement. But I'm desperately worried for younger friends and wider society.

Mortgage holders can sell the house, renters cant sell thier landlords house

If there are lots of repossessions, hardly any fucker will be able to sell a house. Especially the poor bastards who'll end up in negative equity.

I moved out of London in 1991. I had a very sellable 2-bed terrace, large garden, off-street parking and close to stations on 2 different rail lines, so half an hour to the City or West End. It took me nearly 18 months to sell it.

Thankfully, I'd had it a few years, so equity wasn't an issue. But my friends had bought a similar house for £75k a year or two before the crash. At one point it was only worth £42k and their mortgage was £67.5k. They couldn't sell. Luckily, one of them had a secure job and they were able to sit it out. Loads couldn't.

The fallout from the double whammy of Covid and Brexit could well make the global crash look like a tea party imo.

@Greentulips1

"Does anyone know (more out of curiosity) if redundancy insurance is the same as income protection insurance?"

As I understand it, you can get different levels of income protection insurance, some basic ones just cover you if you can't work due to injury or medical reasons, some more enhanced policies may include redundancy protection but are more expensive. Depends on the policy!

@ShellsAndSunrises

I agree that people need help, but this creates a dangerous precedent of “worthy” reasons to be unemployed, and “not worthy” ones.

Surely everyone who is unemployed and entitled to help deserves the same help?

I agree that everyone who is made to be unemployed through no fault of their own should get the same help, but the difference with being made redundant in normal times and being made redundant because if Covid is that with the latter, it’s a result of government policy. They made us go into lockdown and they have been the reason that many businesses are struggling, especially with the 10pm curfew, so there are redundancies happening that are directly caused by government.

Usually when people are made redundant, it’s not the governments fault.

Sorry, I’m flabbergasted there seem to be people without redundancy insurance.

I have redundancy insurance and always have done. When I mentioned it at work once I was surprised to find I'm the only one who has it

That being said UC does seem a bit "unfair" - there was a poster on a month or so ago. Her husband earns £70k a year and because they rent they are entitled to UC!!!!!

There is no equity in my house so just selling it wouldn't solve any financial problems if I lost my job and didn't have insurance. But when I checked we wouldn't be entitled to ANY UC even though DH earns £20k a year - so solely by the virtue of someone renting they can earn £50k a year more but still get UC where we would get nothing.....

@Greentulips1

Income protection and redundancy insurance are the same thing, some places also call them lifestyle protectors

Mine pays out for 12 months in the event of redundancy. For £45 a month I would get £1400 a month if I lost my job which is just enough to cover our mortgage and the couple of loan liabilities we have.

@CuppaZa explain how self-employed people get redundancy insurance.

You can get income protection if you can't do the same job or work at all due to long-term/life-changing illness, but if you are self-employed or your main income comes from self-employment you cannot get redundancy insurance.

@RedRumTheHorse

That's correct. Because the self employed pay different tax levels/have more tax breaks/ pay themselves more than an employee are supposed to factor in periods of no work into how they manage their money

@ivfbeenbusy

That is an old myth.

Lots of self-employed people are on low incomes.

In certain sectors e.g. arts, entertainment it is very difficult to get a permanent job due to the type of work. That's why it is common to find actors/singers who work as shop workers, bar staff and waiters between roles.

@RedRumTheHorse, regardless of whether you are employed or self employed (DH is self employed), if you borrow a substantial amount of money, you put safety nets in place, should the worst happen.

[quote ivfbeenbusy]@RedRumTheHorse

That's correct. Because the self employed pay different tax levels/have more tax breaks/ pay themselves more than an employee are supposed to factor in periods of no work into how they manage their money [/quote]
What a load of old bollocks! What about the care workers who have to go on self employed contracts? I can assure you, they do not earn a lot.

DH was made redundant due to the effects of covid on his employer; how is it any different than if he were made redundant in a few months due to the effects of Brexit on his employer, or if he had been made redundant because a competitor was undercutting his employer and they were losing business? Are we more deserving than our friends who lost jobs at other times?

there was a poster on a month or so ago. Her husband earns £70k a year and because they rent they are entitled to UC!!!!!

Can you link the thread? It would be unusual to have any entitlement to UC with a family income of £70k- were there disabled children etc?

The point of the housing element of UC is to ensure you are housed, not to support you to build up wealth. Rent buys you somewhere to live, a mortgage buys you somewhere to live and also a big asset for the future, people must be able to see why there is a difference in support? I think SMI via UC should be payable from the start of the claim, it makes no sense to make people wait 9 months, but I wouldn't support home owners having repayment mortgages funded by UC and I'd limit the amount of time SMI could be claimed for to 12 months.

And yes, HB/ the housing element of UC generally does pay someone else's mortgage- best solution to that is do away with BTL mortgages and embark on a programme of building and purchasing social housing on a massive, massive scale.

Income protection insurance didn't seem worth it for us, expensive due to previous illnesses and you need to have gone through proper redundancy processes- my industry prefers an "agreement" and enhanced payout so insurance wouldn't pay. So we have a decent emergency fund instead. I do think you need to consider what you'd do however and not assume state help, though it feels unfair that renters get help we know what we sign up for

So if my job is at risk and I take out a mortgage then get made redundant the tax payers should then pay off my mortgage for me? Can't see that going down well with everyone else, if you can't afford your mortgage then you sell up and rent like everyone else who can't afford a mortgage.

It’s going to be an absolute mess but no I don’t think the government should step in. Part of the reason that house prices are exorbitant is people being granted mortgages when they shouldn’t. I have made financial choices to live in a smaller house and go on less holidays etc so if everything went wrong I could still pay the mortgage and ride out a crisis. The state shouldn’t be there to support people who are greedy and don’t have savings.

@dontdisturbmenow

you actually can't get redundancy insurance at the moment It's at the time you get the mortgage that you get the insurance, not when you know need it. That's the whole point of insurance!

I think the problem is that when people are renting and look to buy instead, they only look at how much cheaper the repayments are. They don't take into consideration the costs that come with being a homeowner. Expensive repairs, interest rates going up, and indeed, insurance in case they lose their job. It's all part of the package.

This is such a good point, especially about the repayment amount. I’m really tired of hearing those around me saying that owning a house is more secure than renting - how can that be the case when you have a 90% mortgage?!

There are far worse consequences if you default on your mortgage payments than there ever is with renting and as a tenant, your landlord has to pay to fix the boiler when it breaks on Christmas Day, not you!

My generation has been sold a lie, it was true in the 90’s but nowadays the return on investment when you ‘own’ your home is so poor that I don’t see the attraction...

@unmarkedbythat

I hid the thread in the end as it just wound me up and I'd end up saying something that would most likely be reported! 🙈.
Pretty sure it was on the childcare boards

But the poster did refer to some online calculators which can calculate UC and she was correct that where she lived based on average rents they were entitled to £500 per month despite him earning £70k!!!! Disgraceful really. No disabled children and she was a STAHP. (I did the calculator as well as I thought she was bullshitting!)

@Igotthemheavyboobs @RedRumTheHorse
Yes I appreciate it doesn't apply to all self employed jobs but that's because companies take the piss when making people work on self employed contracts.

I’m really tired of hearing those around me saying that owning a house is more secure than renting - how can that be the case when you have a 90% mortgage?!

Because you're unlikely to evict yourself with 2 months notice?

Because if you keep paying the mortgage you will one day own the property?

There are far worse consequences if you default on your mortgage payments than there ever is with renting

Homelessness is a bad consequences whether you are a mortgage payer or renter.

My generation has been sold a lie, it was true in the 90’s but nowadays the return on investment when you ‘own’ your home is so poor that I don’t see the attraction...

The ability to choose whether or not you have pets, decorate, etc is one. Being able to apply for schemes that are only available to home owners (re insulation, boilers, that sort of thing) is another. Knowing that if you keep paying the mortgage you won't be evicted is probably really nice- because you can be a model tenant who never misses a payment and still be served notice to leave if that suits the landlord. Knowing that after 20-30 years you own the house and don't have to find a way to fund housing in retirement must be a lovely feeling. Getting cheaper car insurance through being a homeowner is a bonus. Not having your home regularly inspected, not having landlords who think they can both make money off you living in the house and use part of it for free storage they can access when they wish to must be absolutely lovely.

That got a bit TLDR I know but I would fucking love the risks of home ownership, I am 39 years old with 3 children and a decent job and am priced out of a house within 2 hours commute of my job and sick to death of the insecurity and lack of control that comes with renting.

@ivfbeenbusy I'll have a look for it! I'm really intrigued now.

I suppose though, in some areas, rents are so insanely high that even a whacking great salary like that wouldn't cut it. My preferred answer to that would be rent controls but I don't think that would be popular on MN :)

Thank you for your responses, interesting. Like pp I am not affected by this but we already have a housing shortage which will be made far worse if we see thousands of people loosing their homes because of massive unemployment rates.
I agree that there has to be a cap on how much should be paid and that the same rules regarding savings should apply. These are unprecedented times, and we are in a deep depression which could last years. The government initiated the rules to stop people working so surely they have to take some responsibility in helping them out.

YABU

@ivfbeenbusy

I have redundancy insurance and always have done. When I mentioned it at work once I was surprised to find I'm the only one who has it

That being said UC does seem a bit "unfair" - there was a poster on a month or so ago. Her husband earns £70k a year and because they rent they are entitled to UC!!!!!

There is no equity in my house so just selling it wouldn't solve any financial problems if I lost my job and didn't have insurance. But when I checked we wouldn't be entitled to ANY UC even though DH earns £20k a year - so solely by the virtue of someone renting they can earn £50k a year more but still get UC where we would get nothing.....

I can't believe that anyone would get UC with a £70k income. Even if it was to pay for the housing element. Local Housing Allowance applies everywhere.

For instance your rent is £100 per week but your LHA is £90 per week, you would need to pay the other £10, it is limited. The highest LHA's are in London and come nowhere near the actual cost of the average rents. I think they must have been on a wind up.

For someone on 70k a year to be able to claim UC they can’t have declared it surely otherwise the system is really screwed.

Agree with PP. I'd love to see that thread.

My bet is the 70k earning OH is a Company Director paying himself a nice tax efficient sum "on the books" and has either not declared his Co. Director status at all, or is not properly reporting his income and expenses into the business.

I mean, the base UC Award would need to be at least 3.5k before deductions!

Also, @Babyroobs is right. The mortgage support is a loan now, and very few people take it up.

It started being reformed around 10 years ago, starting with changing how they set the interest rate (as when it used to track the Bank of England base rate, those on fixed income rates then inadvertently had some capital paid off), time limits (gradually went to a 2yr limit), then extending the "waiting period" and then changing it to a loan.