What would you do? (Housing benefit)

[thesnootyfox]

Hypothetical scenario here (sort of!). Married couple - dh works full time and dw works p/t flexibly in order to look after the couples children. They divorce and sell house. Dh gets approx £30k which he uses as a deposit on a flat, he has always had a steady income so no problem in securing mortgage.

Dw gets approx £50k. larger share because she will have the main custody of the children. Because dw put her career on hold mortgage companies won't touch her with a barge-pole so she has to rent. Renting very expensive at around £900 per month. Dw can not claim housing benefit because her share of the equity is more than the £16k allowed.

Do you A) Spend the money on rent and accept that it will be spent in a couple of years and you will never have the the same choices as Dh.

Or

B) Blow the cash and just keep £16k in your savings account so you can claim housing benefit.

Or

C) Let dh have most of the equity and tell him to invest it wisely with the intention of giving it to the children when they are older.

Put it in to a trust for the children.

If you blow the money you will probably find you still don't qualify for benefit. They will look at deprivation of capital.

If the children have savings there are still implications for housing benefit. I don't know if a trust is the same as savings?

I have just thought of another option.

D) dh gets a higher equity share which reduces his mortgage payments. In exchange for the higher equity share he pays a higher amount of maintenance.

I would not agree to an arrangement that has H housed securely (although with a mortgage) and W renting insecurely, with the children, where she has to spend her only capital and will therefore be left with absolutely nothing.

Is this a done deal OP?

First priority is housing the children. If that means the other parent can't buy, so be it. Maybe the house can't be sold until children are 18 or 21, which also lets their primary carer start getting back into full-time work and make a few plans for her own future.

D) is a disaster for W because she carries all the risk. What if H loses his job? That's the end of her maintenace, and he's had more of the capital.

I think the house would have to be sold as there is not enough money to pay for two homes.

E) sale of house is deferred for some years, depending on age of children, whilst W gets the opportunity to increase her own mortgage capacity by moving towards full-time work. H pays mortgage and his own rent meanwhile, because W is still making contributions by being primary carer. On sale of house h and w get closer to 50:50 of equity, so each can rehouse on an equal footing.

20k more is not enough to make up for the massive financial effect on W's earnings which is the consequence of being primary carer, working p/t etc.

Based on current salaries it will be a while before dw can earn enough to buy anywhere in the south east (if ever). Dh doesn't earn anywhere near enough to pay mortgage and rent. Selling the house seems to be the only option.

I thought that the primary care giver received 60% of the equity. I'm going back a few years though. I remember some friends divorcing and the dw received 60% this was about 10 years ago.

Some mortgage lenders will lend on Tax credits and Csa aswell as earnings - any help?

There is absolutely no fixed rule about what % anyone gets.

It's primarily about need, and the children's need to be housed comes first.

Sometimes that means the primary carer gets 100% of equity, but not often.

Presumably h has a pension after years of steady employment?

DW should do d) Get a better paid job.

Both parties should take proper advice. It's not possible to get an accurate picture from a few posts on a forum. Tell them (or yourself!) to findcasolicitor who's a member of Resolution and get advice.

Theoretically could move to a cheaper area and the equity could be used to buy a share in a shared ownership property. However this means even more upheaval and upset for children.

I expect dw will stay put for the next 10 years, concentrate on earning more money and see how things stand then. 10 years is a long time to wait.

Yes h has a very good pension. Dw has a pension that is almost worthless.

Get ex to be guarantor on your mortgage

DW should check what capital limit is in that area for claiming benefits. New rules for council tax benefit come into place from April and limit could be reduced.

Use capital as payment for shared ownership property. Rent remainder.