How State Benefits Help with Mortgage Payments

Paying the Mortgage when Life Changes for the Worse

Nov 25, 2008

The number of people struggling to make mortgage payments and in arrears continues to grow. However, state benefits can cover the interest and prevent mortgage default.

With rising levels of unemployment, the number of those struggling to make mortgage payments continues to increase. According to an article in The Independent in August 2008, "The total number of mortgages three months or more in arrears has risen by 29 per cent to 155,600." The risk of repossession, as a result of mortgage arrears, is greater than at any time in history.

Who on State Benefits Can Claim to Have the Interest Paid on Their Mortgage?

The groups on state benefits outlined below can claim to have some of the interest paid on their mortgage. This can be invaluable if credit arrears exist and people are finding it hard to make their mortgage payment each month. It can also help prevent mortgage default and repossession.

How Much Financial Help is Given to Make the Mortgage Payments?

The main proviso when claiming state benefits to cover interest only mortgage payments is that the loan was taken out exclusively to buy the property. If it has been taken out to perform debt consolidation or build an extension, state assistance is unlikely to be offered on all of the borrowing.

It may be that some of the mortgage was taken out to pay for the property and some for debt consolidation. If this is the case it is worth checking to see if some of the mortgage payments can be covered. Although it won't be as much as is needed, it can help prevent repossession if already in arrears.

Those that are eligible for assistance will get the interest paid at up to 6.08%. It won't cover the entire mortgage and it will also be necessary to see if the lender is willing to accept the payment of interest until the financial situation improves.

State Benefits for Existing Borrowers - Before 2nd October 1995

For existing borrowers, it is necessary to wait a period of 8 weeks before claiming state benefits towards any mortgage interest payments. Only half the amount will be paid for the first 18 weeks and then the full amount is paid after that.

State Benefits for New Borrowers

New borrowers will have to wait 39 weeks before getting assistance with their mortgage interest payments. The amount will be paid in full. The exception to this rule is if a borrower is over 60 years of age. The Department of Work and Pensions will pay mortgage interest payments in full as a pension credit.

Getting state benefits to help to make mortgage payments is helpful, but it is only a token gesture if in arrears and facing repossession. Always consult a debt counsellor as soon as problems begin as a Debt Management Plan may help deal with other aspects of loan and credit card financing.

The copyright of the article How State Benefits Help with Mortgage Payments in Home Mortgages is owned by Asa Ghaffar. Permission to republish How State Benefits Help with Mortgage Payments in print or online must be granted by the author in writing.