Employment and Support Allowance (ESA)
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ESA and endowment mortgage maturing

MikeornotMikeornot Member Posts: 12 Connected

Hi all.

I am in the work group of ESA (income) for the last 3 years, and also receive PIP.

My mortgage endowment policy just matured, and I paid off my mortgage. My policy paid out approx. £19,400, and my outstanding amount on my mortgage was approx. £7,000. My overdraft and credit cards were another £500 or so, leaving just under £12,000.

I called up ESA and told them about my policy maturing, and handed in bank statements as requested. They stopped my ESA benefit from the day I called them a few weeks ago.

I was called yesterday to say they had received all my paperwork, and they would be in touch. The person that called said they didn't think I would get any payment though, as I was over the £16,000 limit. This has left me really worried as I thought paying off my mortgage with an endowment that was taken out for that purpose was ok. What was I meant to do, refuse to pay off my mortgage?

I expected my payments to be reduced as I would have savings between £6 and £16K but I didn't expect to lose everything.

Any advice welcome.

Replies

  • wilkowilko Member Posts: 2,358 Disability Gamechanger
    @Mikeornot, hello and welcome, sorry to read your money benefits problem, your dammed if you did or didn’t, you are not the only person in this predicament having endowment policies coming to maturity while still claiming benefits any the payout takes them over the limit, I would have advised seeking financial advise before the payment was due, you could have taken out  two prepaid funeral plans and that would have spent £10,000 we all have to pay for this sad event and DWP can’t take the value of the plans in to account. Other member may have ideas or advice.
  • MikeornotMikeornot Member Posts: 12 Connected

    Thanks wilko. It was an endowment only mortgage, so it had to be paid. I don't think the Halifax would have been happy if I said I wasn't paying them.

    I've looked into prepaid funeral plans, but they don't seem to be covered by any financial authority, and I worry the money could be lost if the firm went out of business.

  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Hi,

    You really do need to get some expert face to face advice regarding this. This link will tell you what's available in your area.

    Proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice I have given to members here on the community.
  • MikeornotMikeornot Member Posts: 12 Connected

    Thanks poppy.

    I've found the contact details for my local welfare rights team and will call them in the morning.

    You think you are doing the right thing by being honest and it always seems to backfire.

  • Adrian_ScopeAdrian_Scope Testing team Posts: 8,008

    Scope community team

    Hello @Mikeornot and welcome to the community. :)

    Did you provide them with proof that you spent £7,000 of it paying off your mortgage? Paying a mortgage and debts such as an overdraft aren't seen as deprivation of capital so shouldn't cause you problems. Do speak with the Welfare Rights team in case you need to argue this. 

    Best of luck and please let us know how you get on.  
    Community Manager
    Scope
  • MikeornotMikeornot Member Posts: 12 Connected

    Thanks Adrian.

    That's what I thought too. There was no intent on my part to hide anything. It was me that contacted them to inform them about my endowment.I provided them with bank statements showing where the money went. I spoke to someone at my local welfare rights team at 9.30 this morning and they took my details and will call me back. I will keep this thread updated as I go through this process.

    Just to rub salt into the wound my local council have been in touch saying that as I now don't receive ESA I have lost my council tax rebate.

  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Did you send proof of the Endowment plan? if you haven't then i'd send that too.  As it was taken out for the purpose of paying off your mortgage then i'll be very surprised if it's deprivation of capital.

    It will go to a decision maker though and they will decide if it is or not.
    Proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice I have given to members here on the community.
  • MikeornotMikeornot Member Posts: 12 Connected

    Thanks Poppy.

    Good shout on the endowment plan! It says on it is a homebuyers plan with life and critical illness protection.

  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    My knowledge on this is very limited. When you first had the mortgage was this plan taken out specifically to pay off your mortgage early and does it actually state this on the plan?
    Proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice I have given to members here on the community.
  • MikeornotMikeornot Member Posts: 12 Connected

    Thanks poppy.

    I'm not paying it off early. It is the full 25 years.

    Speaking to the welfare folk person earlier, they think the person that phoned me didn't understand the details. The person that actually deals with this should have more knowledge of the rules, and I should be ok.

    Fingers crossed.

  • Adrian_ScopeAdrian_Scope Testing team Posts: 8,008

    Scope community team

    Hi @Mikeornot, it is quite typical for them to suspend your income related benefits while a decision maker looks into it. Hopefully they'll decide quickly and then reinstate your ESA (which should fix the problem with your council tax too). 

    Please keep us updated. :)
    Community Manager
    Scope
  • MikeornotMikeornot Member Posts: 12 Connected

    Thanks Adrian.

    I called the DWP this morning (usual 30 mins on hold), and was told the case is now in the hands of the decision maker and I should hear soon.

  • MikeornotMikeornot Member Posts: 12 Connected

    Well I got my letter today and they are not paying me any money at all.

    I'll have to phone them on Monday for an explanation.

  • poppy123456poppy123456 Member Posts: 22,218 Disability Gamechanger
    Does it not explain the reasons why in the decision letter?
    Proud winner of the 2019 empowering others award. This award was given for supporting disabled people and their families for the benefit advice I have given to members here on the community.
  • MikeornotMikeornot Member Posts: 12 Connected

    Hi poppy.

    No explanation.

    "We have looked at your claim again following a recent change"

    "You are not getting blah blah blah...……

    Phone call on Monday.

  • MikeornotMikeornot Member Posts: 12 Connected
    Called the DWP and it seems the letter I received on Saturday was just a computer generated letter, and my case is still in the hands of the decision maker.
  • Adrian_ScopeAdrian_Scope Testing team Posts: 8,008

    Scope community team

    Hi @Mikeornot, I'm glad that it was a false alarm, although I'm sorry to hear you're still waiting for a decision. Thanks for keeping us updated and I hope you get a resolution very soon.
    Community Manager
    Scope
  • MikeornotMikeornot Member Posts: 12 Connected

    I called the DWP again last week, and finally made some progress.

    Just checked my bank account, and my ESA payments have started again, along with back payment. Hopefully a letter will arrive today explaining the details.

    Thanks to everyone for the support. It really helps when you know someone is there for you.

  • deasson58deasson58 Member Posts: 3 Connected
    edited August 2019
    Hi..just gone through the same thing!, I recieved 2 work pensions and this removed most of my ESA and my disability premiums, because the pension income moved me from income based to contribution based.
    After contacting DWP and fully informing them of my intention to pay my pension lump sums into paying my mortgage, they rejected my mandatory reconsideration as my savings were above £16000 (which in 2019 is ridiculous as most people of pensionanble age will receive some kind of lump sum, meaning you will automatically have your benefits cut). So you will lose most, if not all your ESA and additional disability premiums, you will also lose your DWP mortgage support loan, you will lose your council tax discount as they work in conjunction with DWP.
    DWP's calculation will basically half your benefit and add a premium deduction based on your additional income..you will move to contribution based benefits, where your income and saving are not counted by DWP, but you've lost all or most of your pension income to offset your benefit deductions.
    The awful way DWP ESA work is that for some crazy reasoning, they think your disabilities disappear when you get some additional income!!!.

    I argued that by paying my mortgage I was repaying a credit agreement and was exempt from DWP rules. DWP say that paying anything like mortgages or debt is a Deprivation of capital....crazy!, they want the sick and disabled to live with debt as a norm.

    DWP say paying you lump sums to your lender are indeed Deprivation of Capital, and would not accept that a mortgage is a debt????

    Something I argued was that DWP were discriminating against claimants as they will not allow you to repay lump sums to your mortgage lender, but will allow you to pay lump sums to pay back your DWP mortgage interest loan..HOW UNFAIR!

    I've passed all this onto my MP, who sees a clear case of discrimination and found the DWP's inturpitation of the welfare act on existing debt to be opposed to the act.
  • Adrian_ScopeAdrian_Scope Testing team Posts: 8,008

    Scope community team

    Hi @Mikeornot, great news the payments have started again and you've already received the backpayment. I'm glad we were able to support you. :)
    Community Manager
    Scope
  • MikeornotMikeornot Member Posts: 12 Connected

    Received my letter, and thought it was fair.

    The DWP accepted that my mortgage, overdraft and credit card payments were not part of my left over capital.

    Hopefully this information can help someone else.

  • deasson58deasson58 Member Posts: 3 Connected
    DWP rejected my defence when I payed a pension lump sum to my Building Society even when providing the terms of my mortgage repayment contract stating that the mortgage would be repaid via pension lump sums, after being unable to work due to severe disability after an accident. I got a lump sum of £32000 (all payed to my Building Society) and a pension of £300pm. DWP decided to remove most of my ESA and disability premiums and morgage relief totalling £880 a month and reduced my payments to £32 a week.

    I notified them months before the pension was due and explained that the lump sum would be paid over as per my agreement with the building society to avoid losing my home, didn't make a blind difference, they would rather see you homeless that use common sense!



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