Advice needed - will using pension money to pay off mortgage affect benefits

[LorKell]

Hi a bit of a complicated one.

My husband was made redundant in July and got a redundancy package that will run out in February. We have gone under the threshold now so can claim universal credit although only entitled to £250 a month as I work part time.
He has worked relentlessly to get another job but so far has had no luck. We will also be entitled to a small discount in council tax and water rates.

While my husband was working over the years he paid a fair amount into his pension fund and as he is 55 can withdraw some tax free that would pay the mortgage for a year.

The trouble is if he withdraws an amount tax free it would have to come in to our bank account for a period of time before it goes straight back out to the bank to pay the mortgage.

This means for a short period we will go back over the threshold for universal credit and discounts in bills so this will be withdrawn.

Is there any way around this ?

We are not trying to fiddle the system. We have worked all our lives and have never ever claimed benefits before. We are just trying to find a way of keeping our home.

My husband is absolutely desperate to work but he is not having any luck. We think that possibly companies are discriminating against his age as he is nearly 56 even though this is not allowed.

Any advice gratefully received.

Any help?

I think you need to ask the DWP. You can have up to 6k before it affects benefits no?

I would ask the dwp but I would suggest it is considered 'deprivation of assets'

Worth a phone call

Depends how much it is. If it's less than 6k then it doesn't have any effect on your Uc. If it's more than that then you may want to look up the deprivation of capital rules and see if they apply.

I'd be concerned about deprivation of assets, too. I'd be surprised if they'll let you access money to then pay into the mortgage rather than living off it - I think they'd probably consider that you could live off that money. But they'd be the best people to confirm for you.

Have you claimed UC yet? Do this before you claim UC and pay it into the mortgage. Then claim UC after.

This is difficult for you OP, don’t know whether it would work for you but a friend of mines DH had similar, he took his pension at 56, and started drawing it straight away. That supplemented by her wage meant they could just about get by for a bit longer on a month to month basis. He managed to get a PT supermarket job to top it up. He had been a senior account director so was very much a change for him but it paid the bills.

He did eventually pick up another full time post.

Thank you for your replies. Yes unfortunately we have only just started claiming UC.
My husband has actually looked into a supermarket job also as he is finding it hard to get a job in his field. He was a senior manager in Finance/revenue.

One thing we have learnt is that the system sucks.

What flirty is suggesting could also be deprivation of assets, you could then find yourself in a whole world of pain as it would be apparent by your evidences you need to show upon claiming

Citizens advice have been paid to assist people access UC so you could try them for further guidance

Your local council tax relief will have there own rules which vary from UC so you could find that the amount is considered “income” for example and you really need to put in a claim and then be brutally honest and accept that you might not qualify

LorKell

I have a friend who was in management and got out, he now drives for supermarket deliveries & is really happy. He doesn’t have any pressures and is a changed man

As for the system sucks, it’s there to provide not be a supplementary income to a pension pot, many on UC don’t have any pots

The only reason my husband has a pot is because he worked his socks off from 5:00 in the morning until 10:00 at night for the last 25 years so he could provide for his family.

Having to use that pot means we will have absolutely nothing in retirement if we use it to pay the mortgage.

The alternative is that we would have to move to a house in another area. We have a life round here, our kids friends are here.

I earn a pittance working for the NHS and we cannot afford to live on my money without benefits and I don't mean for luxuries. I mean just to pay the bills every month. My kids don't even qualify for free school meals.

All we want to do is give ourself some breathing space with the mortgage for a year.

There are plenty of people out there scamming the system and we want to do things the right way so yes I'm afraid the system is unfair and does suck.

I'd think that paying the mortgage could count as supporting yourself (rather than a deprivation of assets), as you are paying for your accommodation.

If you're intending to have it sitting in your bank account and pay per month that would be one thing (and you wouldn't be entitled to means tested benefits while you're over the £16k limit) but can you pay your 12 months' payments up front?

When I did benefit claims a long while ago we weren't just looking at the fact they had the money and now it's gone, but also what they did with it. People used to pay their rent up front for 6 mo/a year, or repaying debt, and that was ok - giving it all away to your mum/sister/dog or stashing in the kids' savings accounts not ok.

Definitely one to take proper, informed advice on before doing it.

Thank you Iliveinahedgefund.

We are intending to pay it in a lump sum up front if we can.

Yes we will take advice.

Thank you everyone.

Has your husband joined all the agency’s , my dsis is an accountant and she purely does contract work through agency’s now as she took early retirement to look after our late mother . She is mid 50s and has no difficulty getting work .

Lorkell

Losing your job is hard, good luck with finding alternative work

He has joined agencies but there really doesn't seem to be anything.

Not sure if it is because of Brexit, election, time of year but he isn't getting any bites.

Thank you IvyKaty44

www.gov.uk/government/publications/pension-freedoms-and-dwp-benefits/pension-freedoms-and-dwp-benefits

Try the above link

Contact pension wise

& don’t apply your logic to an assessors decision- I mean well by the last comment, but I struggle at times with how assessors use their guidance books

Pension is income, so I'm pretty sure it will be counted as income for UC purposes in the year that you receive it. It won't matter what you do with the money once you get it. The receipt of the money itself is income.

Could you ask for a mortgage payment holiday? On the basis you can feel comfortable that in the future you will have the means to pay it off?

NeverTwerk - If op's dh still takes the lump sum it will exclude them from claiming any UC if over 16k and will reduce their Uc if over 6k.

the 16k and 6k are for cash in the bank as I understand it. Because they don't already have the cash and the receipt of the pension will be treated as income it is likely to completely wipe out any UC entitlement. Citizens' Advice should be able to advise

If you have a mortgage, I believe that you can get a government loan, that would need to be paid back
The info is probably on www.gov.uk

Alternatively, you could ask the bank if you can pay the mortgage interest only until he gets another job

If you have a spare room, you can rent this out, tax free up to a certain amount, info on www.gov.uk

Does he have any contacts that he can use to get another job or someone who can recommend him for a job ?
Is he on LinkedIn ?

I've been made redundant, but I was lucky to find employment quickly

Good luck

Flyaway - The SMI ( support for mortgage interest ) loan is only available to people who have had no earnings at all and been on Uc for 39 weeks..

Like a PP, I was going to suggest a lodger - their rent could ‘pay the mortgage’ in the short-term and then if you can up your hours/get a second job and your DH can get any work - it’s a pity he hasn’t applied for seasonal work at this time of year e.g. deliveries/shop work - then could you get by?