can we pay a small unexpected windfall off our mortgage? — Scope | Disability forum
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can we pay a small unexpected windfall off our mortgage?

mrpip2002uk
mrpip2002uk Member Posts: 56 Connected
hi everyone,
my wife and i are both disabled,both of us are on PIP ,both of us are  on high awards of care and mobility rates.
i claim ESA in my name for both of us,i'm in the support group and our weekly payment is approx £180pw.
we currently owe £32,000 on our mortgage.
out of the blue my wife has received a letter from barclays, who'm she worked  for approx  6 years when she was in her 20s,shes been informed by them that when shes 60 in january,she can have her private pension from them, paid either in a lump sum of £20,000+ or £20 a week as long as she lives.
we need to know,with us being on ESA,if we would legally be allowed to have the lump sum and pay it  all off our mortgage,which would make our finances a bit easier in the future.
i know that if she took  the £20 a week,we would be able to keep it by the DWP,and it would not affect our benefits.
but the thought of paying that kind of money off our mortgage would be great, and help us a lot,and thats what we would prefer to do,if it would be legal?
i pressume she would have to pay tax on her little windfall but we dont know how much  tax it would be?
i would be grateful if any one who has advice could share it with me please,thanks,J


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Comments

  • poppy123456
    poppy123456 Member Posts: 24,723 Disability Gamechanger
    If she took the £20 per week it would reduce your ESA £1 for £1 because it will be a works pension. I don't know if this would come under deprivation of capital, especially if the mortgage isn't immediately repayable.
    I note from another thread that you will soon be reaching state pension age and it was advised that you claim UC before reaching this age. When are you planning to claim UC? because paying off your mortgage when claiming UC is not classed as deprivation of capital.
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    yes thats correct,in about 18 months
  • calcotti
    calcotti Member Posts: 3,348 Disability Gamechanger
    I agree with poppy that if you are going to claim UC anyway then it would be best to do this before your wife receives the capital because the rules around paying off debt are much clearer for UC.

    When you are on UC you have a monthly assessment period. It is the capital you possess on the last day of the assessment period that matters. If your wife receives and spends the money within the same assessment period it will have no impact on the UC. She should still declare it and show how it has been spent.
    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    we will still be on esa in january,and then we will claim uc approx 12 months or so after that.so we wont be on uc  in january 2021.

  • poppy123456
    poppy123456 Member Posts: 24,723 Disability Gamechanger
    we will still be on esa in january,and then we will claim uc approx 12 months or so after that.so we wont be on uc  in january 2021.


    In that case if you used it to reduce your mortgage then it will be down to a decision maker from DWP to decide whether it's deprivation of capital. If it is then you'll still be classed as having that money and your Income Related ESA would stop.
    If any part of your ESA is Contributions based then this will continue (£114.10 per week)
  • calcotti
    calcotti Member Posts: 3,348 Disability Gamechanger
    edited November 17
    we will still be on esa in january,and then we will claim uc approx 12 months or so after that.so we wont be on uc  in january 2021.
    I assume you mean January 2022. That is your choice. You can claim UC whenever you want.

    Do you know if your ESA is entirely income based or is it a mixture of contribution based and income based? If you have more than £16,000 in your account your entitlement to income based ESA will end.
    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    i dont know if our esa is contributions based or not,i was put on to esa from income support quite a few years ago now.
    we thought that with 2 children in their 20s  at home, the dwp might understand that if we basically paid off our mortgage and we passed away the children would have a roof over their and the council would not have to throw them out on the street?
    i dont understand the deprevation bit,?maybe we could contact the dwp and ask them outright what would happen if we were still on esa,would we be allowed to pay the lumpsum off the mortgage,for the reason ive stated about the kids.
    but i do sense that  you both seem to think that we'd have more chance of being able to pay the payment off the mortgage if we were on uc?
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    no we dont have any savings,and we have no other income but the esa
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    so if we claimed uc now,we would basically be on the same payment of benefit each week as esa,and this might allow us to legally pay the pension payment off the mortgage? 
  • poppy123456
    poppy123456 Member Posts: 24,723 Disability Gamechanger
    edited November 17
    If you claimed UC now you would be entitled to the LCWRA element from the start of your claim. 
    LCWRA pays more than ESA Support Group, so you would be better off because your current ESA doesn’t include the SDP. 
    Providing you pay the mortgage off before then end of your assessment period, if you claim UC then it’s not classed as deprivation of capital.
  • calcotti
    calcotti Member Posts: 3,348 Disability Gamechanger
    edited November 17
    so if we claimed uc now,we would basically be on the same payment of benefit each week as esa,and this might allow us to legally pay the pension payment off the mortgage? 
    If you claim UC now, based on the information you provided, I would expect you to be better off by £15/week as explained in your other thread here
    https://forum.scope.org.uk/discussion/85931/advice-on-what-will-happen-to-my-disability-and-benefits-when-i-reach-66-pension-after-esa/p1

    i dont understand the deprevation bit,?
    Deprivation of capital is where you spend money and the DWP decide that you have deprived yourself of capital in order to increase benefit entitlement. If they decide you have deprived yourself of capital they can treat you as if you still you have it.

    We are not saying that you will be unable to pay off the mortgage and retain ESA but it is for the DWP to decide. On UC they cannot treat you as depriving yourself of capital if you use it to pay off debt.

    i dont know if our esa is contributions based or not,i was put on to esa from income support quite a few years ago now.
    In that case it is almost certainly all income based ESA but you can check by asking ESA.
    Information I post is for England unless otherwise stated. Rules may be different in other parts of UK.
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    poppy,how long is the assessment perod for uc,is it a month.
    so if we put in a claim for uc a week before the lump sum pension is paid, we could then pay it off the mortgage straight away? and that might be legal?
  • poppy123456
    poppy123456 Member Posts: 24,723 Disability Gamechanger
    edited November 17
    Each assessment period lasts for 30 days. So if you claimed on the 15th of the month your AP would be 15th to 14th of each month.
    Its not “might be” legal at all. As advised a few times….
    Providing you pay the mortgage off before then end of your assessment period, if you claim UC then it’s not classed as deprivation of capital.

  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    thank you both calcotti and poppy.
    we will put in a claim for uc a week before the payment is due and pay the lumpsum off the mortgage straight away,we only want to do it right way so theres no come backs on us.
    its odd how different benefits have different rules,youve help me make a decission guys ,thank you
  • poppy123456
    poppy123456 Member Posts: 24,723 Disability Gamechanger
    As you’re better off by claiming UC why wait until January to claim it? Your assessment period is each month, not just the first month.
  • woodbine
    woodbine Community Co-Production Group Posts: 5,632 Disability Gamechanger
    no we dont have any savings,and we have no other income but the esa
    and your PIP, if you only want to pay off the mortgage because you are worried about your children perhaps the insurance would take care of that if you have insurance?
    I am a person with epilepsy not an epileptic, my illness doesn't define me.
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    i thought it would have to be done while we were claiming uc for the first time,hence saying well claim the week before the lumpsum arrives?
    so once weve made the claim and got uc ,we can make a payment off our mortgage whenever,but obviously keep all the paperwork for proof of where the income as come from?
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected
    yes woodbine we do,but it would make our lives a bit easier finance wise in the future and cut out a little stress.
  • poppy123456
    poppy123456 Member Posts: 24,723 Disability Gamechanger
    i thought it would have to be done while we were claiming uc for the first time,hence saying well claim the week before the lumpsum arrives?
    so once weve made the claim and got uc ,we can make a payment off our mortgage whenever,but obviously keep all the paperwork for proof of where the income as come from?
    No, as advised a few times your assessment period is each month and not just your first month.
    Once the money is in your bank providing you pay the mortgage before then end of your assessment period it’s not deprivation of capital.
    This is one good thing about UC, unlike the legacy benefits.
  • mrpip2002uk
    mrpip2002uk Member Posts: 56 Connected

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