Unwell, unemployed and about to be repossessed

[Desparatessusie]

My job was terminated last December ( I refused to take overseas money into my personal account) Fellow directors are now in prison. At the time I felt very unwell but thought it was the stress, it wasn't. I had developed a life changing condition that means I will end my days in a wheelchair. I can no longer walk without aids. I'm late fifties.
I never received my final wages, notice or holiday pay. Neither did my colleagues. We all have tribunal awards which have not been paid. The offices are mothballed.
I contacted my mortgage lender to request an interest only arrangement. They refused. I didn't have a job so I didn't meet their lending criteria. They offered a three month repayment holiday.
I did manage to pick up a couple of months consultancy which I did from my sick bed and duly paid my mortgage with it. However I ve not been able to secure another job. I can't work locally as I can't stand or sit in one spot. My GP is happy to medically retire me.
We've now got to six months repayment holiday and the building society have started the process to repossess the house. I have 25% equity.
This would not buy me a house where I live.
I have a final salary pension due in 12 months but it's got a 90%, penalty for early payment. I have a few shares but they are locked until December 2025 when a company I helped found will be sold.
I've no assets that would raise sufficient funds to pay off the arrears. No jewellery, cars, art etc.
I have two adult DC at home and commuting to university. The older has his finals next year. They fund their selves. I have no other family who could help.
I don't know what else I can do.
Any advice or signposting would be gratefully received.

Are your dc working?

If so I would try and see if they can remortgage over a much longer term in their names so that the monthly mortgage cost is much lower. Or adding them to your mortgage so that it’s joint between the three of you. You’ll need a mortgage broker who can suggest who you could get this mortgage with.

Ideally see if you can get it down to £2000 a month and then overpay once you get your pension.

Your children may need to contribute for a while, but you can arrange it so that they then own equity in the house.

Final salary at 60.

My lender gives mortgages to 70. Depends on age at which OP is getting her DB pension.

Cmon now she can’t do that, her kids are at uni, she can’t ask them to take on her mortgage, it’s 4 grand a month, there is no way that’s sustainable. She has 2 grand a month coming in. She needs to move, and find a low cost rental.

4K a month would deplete anyone’s finances very quickly. I agree with selling and downsizing. The DC can help themselves for spending money with part-time jobs, but you can’t expect them to manage the shortfall when they have uni and commuting. I’m sorry you’ve had such a terrible year. I hadn’t realised drawing your pension early had such punitive strings attached.

She is potentially already at that and zhes nowhere near enough coming in to pay four grand a month on the mortgage or even 3.

Also agree. You need to sell

@Littleannoyingperson OP says she’s getting her pension at 60 next year so is 59. So nowhere near 70.

The housing element is only for rent.

For the OP to claim mortgage interest relief she would need to make a claim for UC and then wait 3 months.

OP if you claim UC you can send in fitnotes and ask to be assessed for limited capability to work which might mean you get extra money on your claim.

This exactly, you'd be putting a huge amount of pressure on them and taking away all their rights to FTB status.

OP, you need to sell your house. £4k a month is unsustainable.

Have you tried to claim universal credit?

The government provides loans to help with mortgage interest to people on means tested benefits https://www.gov.uk/support-for-mortgage-interest/eligibility

The problem will be qualifying for universal credit. Your equity in your home and your unclaimed private pension are ignored, but if your shares are worth more than 16k that could be a problem and you'd have to fight your corner for why the shares should be ignored as capital until they become accessible

As an adult with no rent liability and no children under 18, your basic entitlement to universal credit will be very low until at least three months after you first claim. This is because that is the earliest you can get the disability element of universal credit (called lcwra)

To get smi loan you would need to stop any extra earnings until you get the lcwra element on your UC because any earnings at all (even £1) would be enough to close your UC account because ESA and JSA are deducted £ for £ off UC and come to almost the same amount as the standard allowance of UC (which is all the UC you'd be entitled to until you get the disability element)

You'd need to sit down and figure out what's the best short term option - trying to work or trying for smi loan

DB pensions usually reduce by 4-5% for each year taken before NRD. Are you sure 90% is correct? Also have you told the scheme that you are retiring due to ill health? Often there is no reduction then.

Would your pension cover the mortgage in a years time?

But the mortgage is 4 grand a month. 4 grand, even if she extends two or three years it is never going to get it down to a manageable level.

The pension reduction definitely sounds wrong (too high) & defined benefits schemes usually have provision for unreduced payment on ill health grounds. I'd look into this but agree sell the house asap. What a grim set of circumstances, hope you can find a way forward.

Apply for accessible housing with your local council. You will get a lot of points for medical need.

www.scope.org.uk/advice-and-support/apply-accessible-housing-association-council-housing

CAB can be really helpful with filling out applications.

Re the DB Final salary pension.

As others have said, 90% reduction to take at 60 sounds too high. We are looking at drawing DP's next year when he is 56. It's approximately 47% reduction.

Can you access a 25% tax free lump sum from it now or at 60 years old?

Will you be able to pay your mortgage once the pension comes in? If so, you only need to get through the next year and I think you should try to stay. Otherwise sell.

Go to the CAB and see how they can help.

• Whether you can get ill health early retirement or an only slightly reduced DB pension (agree that 90% reduction sounds v unusual)
• Universal Credit - what can you get to take you through the next year if/when JSS runs out
• Holding off the mortgage company for the year, with lower payments, until you can pay in full plus arrears in a year

Then, yes, explain the situation to the children and that they need to step up just for this year to ensure your future.

A not good situation but hopefully there is a way through.

Be wary of getting advice through mumsnet, some is good and some is plain wrong. Ignore the PP banging on about DLA which is irrelevant.

I suggest you contact your local Citizens Advice on Monday. They can advise on benefits, debts/budgeting and housing options. See https://www.citizensadvice.org.uk/about-us/contact-us/contact-us/contact-us/#h-find-your-nearest-citizens-advice

My thoughts for what they're worth:

Is it definitely JSA (Jobseeker's Allowance) you are claiming? Not ESA (Employment and Support Allowance)? I advise you to claim ESA which means you will need to provide 'fit notes' from your GP and will eventually have a work capability assessment. After that, if you're put in the "support group", you will get more money.
https://www.gov.uk/guidance/new-style-employment-and-support-allowance

Are you claiming Council Tax Reduction? If not you should claim, you shouldn't have any Council Tax to pay, as you have no income other than benefits and the only other adults living with you are students.
https://www.citizensadvice.org.uk/housing/council-tax/applying-for-council-tax-reduction/

Definitely apply to your local housing register, especially if there is a chance you will need accessible housing (eg bungalow or ground floor flat) or even supported housing in future.
https://england.shelter.org.uk/housing_advice/council_housing_association/how_to_apply_for_council_housing

Also look into shared ownership - if there are shared ownership properties near you, it might be possible to buy a share using the equity from the sale of your house (after paying the mortgage and solicitor/agent fees) and pay rent on the rest. You would be able to claim Universal Credit with the housing element towards your rent costs.
https://www.gov.uk/shared-ownership-scheme/finding-shared-ownership-home

Lastly, your local Citizens Advice can advise you about schemes you might be eligible for, such as discounted tariffs for energy and water, and grants to help with your living costs.

Good luck.

I will speak to the pension provider re early payment on ill health. I did try to access it in Covid at 55. It won't be enough for the mortgage.

You are all being very kind. I feel so stupid.
I have interviewed for loads of jobs but I can't do multiple commutes. My mobility won't allow it.
I've commuted for twenty years. I can't even drive beyond thirty minutes now.
Retail work I couldn't do due the standing and for desk jobs I couldn't sit behind a desk. I can't bend my legs. I don't know a single person in my industry at my level in a wheelchair.

You're not stupid, you've had a triple whammy of poor circumstances

Be aware that if you do take your pension early, it would affect any entitlement to means-tested benefits (such as Universal Credit, if you rent, and Council Tax Reduction). It wouldn't affect contributory benefits (new-style JSA or ESA).

For pension advice, try Pension Wise: www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

When will your mortgage end?
Were you planning on using the lump sum to pay off the balance?

It seems to me that if the pension isn't sufficient then selling is the only option given how high your repayments are (it's going to be difficult for your dcs to cover the shortfall )

Once upon a time I use to work for a bank repossessing properties. Courts were just too nice and debt just kept accruing. If you're facing repossession you're better off selling and getting whatever equity you can. Maybe rent short term and move to a cheaper part of the country once dcs move out and buy somewhere (but have dcs pay rent/keep in the interim).

This is a good idea op. Likely you will need to wait till it’s repossessed, which is something to consider. You will also have equity.

I do think you need to contact the pension provider as it feels like the info you have is incorrect and most schemes allow medical retirement with very little to no penalty,

4k just isn’t sustainable, you’d need to get it down closer to 1 and that isn’t feasible, so get out, grab the equity and then either rent or apply for social housing. Then you can enjoy your pension and live stress free.

My younger DC knows we have to sell but is kind and said mum we can live in a shed as long as I can stay with you.

My older DS is a difficult person and wouldn't help financially. He is moving out next spring. He does work but refuses to pay anything. I haven't told him of the building society decision. He reads my mail so he must know.

I lost a lot of money years ago. I spent a decade repaying the debts left to me. My DS remembers it all. My DD not so.

I thought I'd got myself back on track and then I work for this dodgy company. The headhunters tell me the market is brutal atm. I am good on paper until they know my age and disability.

Back to private renting again.

I'm really sorry to hear of your circumstances, OP.

You need expert advice, beyond what most people on here can provide. I would recommend contacting Step Change which is a U.K. debt charity. They really helped a family member of mine.

www.stepchange.org