- This topic has 24 replies, 21 voices, and was last updated 8 years ago by br.
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What sorts of benefits/security for one losing their job?
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SaxonRiderFull Member
Hypothetical question, as I am not in any immanent danger of losing mine.
I have, however, worried about it from time to time, and wonder what I would do in the short term.
So, for a sole wage-earner with an at-home partner and a number of dependent kids, a £120000-ish mortgage, but no other debts, and not a good deal to sell, what would one do?
The mortgage, for example? Do banks give you a ‘breather’ for a month or two? Or do you just lose your house and everything you have sunk into it? Is there a temporary benefit that would allow you to keep making the payments?
What other benefits would be available? How would one survive, short and medium term, assuming appropriate new jobs were not exactly falling off the shelf?
maccruiskeenFull MemberIs there a temporary benefit that would allow you to keep making the payments?
I’m going on memory here (from many moons back) I think you can claim housing benefit to cover the interest element of mortgage payments – i.e. to be able keep you in the house but not pay off the capital.
trail_ratFree MemberRBS at least lets you use your overpayments as credit to take a payment holiday to the value of your overpayments so that would buy me a few months
Over and above that you could save a rainy day fund to cover your non negotiable outgoings.
Minimising your monthly non negotiable comittments (ie car payments / HP / TV etc) so that you have room to cut back if the day arrives.
scotroutesFull MemberMortgage; banks are pragmatic. They can’t turf you out the day you lose your job and it’s a lot of hassle for them to get title to your house and sell it. It’s much easier for them to extend you a little time and credit.
bearnecessitiesFull MemberMr Maccruiskeen is nearly there; regarding mortgage interest, if you are in receipt of one of the relevant benefits, you can receive payments towards your mortgage interest, administered by DWP, not the LA. Circumstance will dictate what kind of period you will have to serve before qualifying, so it is not a ‘short term’ solution.
If also now depends on what area you live in as to what benefits you will be able to claim, due to the rollout of Universal Credit.
Google is your friend for such hypothetical musings 🙂
somoukFree MemberI often wonder this myself, I’ve recently been looking in to redundancy insurance but that’s not the cheapest and normally requires you to wait a few months before you can claim off it.
beamersFull MemberI’m watching this thread with interest as I am in a similar situation that the OP has described, albeit with a larger mortgage. We have enough in savings to cover the mortgage for a fair while.
the-muffin-manFull MemberMortgage interest can be paid – they won’t cover a huge mortgage that let’s you live in a mansion though. It often works out cheaper for them to keep you in your own home than go through the expense of re-housing (especially if kids are involved).
SaxonRiderFull MemberIt often works out cheaper for them to keep you in your own home than go through the expense of re-housing
That’s what I’ve always wondered about. I live in a modest house in a modest neighbourhood, and I expect that rents almost anywhere would be dearer than my mortgage – especially on a house big enough to accommodate my family. That said, it is not a mortgage I could easily pay while staying on top of other, necessary, outgoings.
One of the reasons we were ever able to afford a mortgage is that MrsSR is such a brilliant money manager. But it also means there are few places we could cut without being in some financial danger.
djgloverFree MemberPart of the reason my wife and I both work is to mitigate this outcome. My mum was a stay at home mum and when my dad got made redundant in the 90s recession he had a breakdown.
We are now faced with a redundancy programme that is likley to see one or both of us leave our current employment. Fortunatley this is a scenario that we have planned well for and, with 20 years service each, would have a big payout and enough cash in the bank to not have to worry for a couple of years at least.
I am now busy thinking about how best to use it as an opportunity.
wanmankylungFree MemberTakes about a year of non-payment of mortgage for the banks to turf you out.
brFree MemberWe have enough in savings to cover the mortgage for a fair while.
Sign-on on day one, and the ‘system’ will apply for all the benefits you’re entitled to.
But, it doesn’t turn up quickly – think weeks/months.
Better to keep your savings for a proper rainy day.
pheadFree MemberSMI used to be next to useless as it only kicked in after a lengthy waiting period, the recession forced them to reduce it.
Its due to be changed from a benefit to a loan in 2018.
Gary_MFree MemberBetter to keep your savings for a proper rainy day.
Do you get benefits if you get a large redundancy payment though? I thought if you had savings over £16k you get chuff all. I really have no clue about such things though.
P-JayFree MemberHere’s some insider knowledge, if perhaps 5 years out of date.
‘They’ don’t often publish such things because it hurts them selling PPI type policies and/or letting people burn through their savings before they have to ‘help’.
The industry considers a loan agreement (anything from a mortgage to a small overdraft) as a two-way agreement. You present them with a set of facts – income, expenditure, nature of job, past payment history etc. They consider the risk and lend you the money based on these facts and a repayment structure and all being well that’s what happens.
Now, if something goes wrong and the borrower has a “significant change of circumstances” they are duty bound by various rules and regulations to be flexible and accommodating. This was very heavily reinforced to them during the big bailouts of 2008/9 but it’s not limited to HBOS, RBS or Northern Rock.
So given the OPs position – the worst happens and they’re laid off unexpectedly – once the world stops spinning, the first thing you need to do is speak to the job centre and work out what you’re entitled too – now I know “entitlement” and “benefits” are a dirty word to some people, but they’re there for a reason and helping people who’ve lost their income through not fault of their own is good for everyone, not just the person who’s lost their job, if you were mad enough to buy any PPI type things, this is now the time to use them. Once you’ve done this you now know what your income is, or will be until you get your next job.
Once you’ve done this contact anyone you owe money too, prioritise mortgage/rent of course. Explain the situation and ask for help, they will usually ask you to complete an income and expenditure form and they will try to come to a temporary agreement in terms of repayment – it ‘usually’ doesn’t matter if the payments you’re making don’t even cover the interest element, although the total amount you owe will rise whilst you’re in this temporary agreement period.
There are clear rules they have to follow in terms of how much they can ask for, they ask for more than you have or expect you to have to beg to feed yourself or kids, if they fail to follow them they will find enforcing anything in the courts (eviction, CCJ, high court writ etc) almost impossible (as long as you actually argue it and not bury your head).
Ultimately bad debt is a nightmare for banks, house repos are expensive and time consuming, car repos are cheaper but usually results in a loss and anything unsecured or less than £5k is such a hassle for them they sell it off for a few % to debt collectors who just send letters so it makes solid business sense to work things out.
If the worst happens, speak to your Bank and explain the situation, they know most people will find work in a few months, sometimes weeks or days and a couple of keystrokes from an call centre person is all but free, so they will usually try to work with you – where people go wrong is they panic, burn through all their cash and then bury their heads in the sand by ignoring letters and phone call thinking they might have to deal with some evil debt collectors.
Banks won’t wait forever though, I’d guess after 12 months they may put a lot of pressure on you to sell-up.
If you work with them the worst you might face is a few days of hassle speaking to nice people on the phone (and a few dickheads, every call centre has them) and a couple of “arrangement” markers on your credit file which almost count for nothing after 6 months – as a former credit underwriter I actually never saw them as a negative as it meant the customer was a sensible type willing to work out issues before they become problems.
jonnyrockymountainFull MemberI have a redundancy policy for about £50 per month gives me £1500 per month back to day one for a period of 12 months, so I can pay my mortgage and have a bit left over to survive.
caspianFree MemberThanks for that reply P-Jay. That’s really useful info.
And again from me.
OP – I lost my job four years ago in your exact situation (debt was very slightly less at the time, I think £110k). I tried to claim housing benefit / income support / anything but had more than £16k in assets so nothing came of it other than some £7/hr labouring work (through agency, not job centre).
Managed to find “proper” work again after three months so it worked out ok.
I now have four times that debt and only enough savings to cover five months of downtime if things go tits up so it’s good to know there is about an extra year’s grace from the lenders if the worst does happen.
To think I never had so much as an overdraft until I was 30! Funny how quickly things change after marriage/kids.
HoratioHufnagelFree MemberI’ve just been through the process of setting up a mortgage and there doesn’t appear to be any penalty in setting up 40 year mortgage and overpaying vs a 20 year mortgage (for example).
This means you’re committed to less outgoings should you lose your job, and also that your overpayment can be used to accrue a payment holiday should you want to.
This was all with Nationwide, who allow overpayments of 10% each year. I.e. 20,000 if its a 200,000 mortgage (I assume others are similar).
Of course, you have to manage your money quite well and actually overpay, otherwise the loan will cost you a fortune.
projectFree Memberwhen youre houe/home is repoed or you hand the keys back the debt on the house/home is still there and all banks /lenders will demand a huge sum of cash back any time up to 6 years later.
a few years ago had to help a mate fill in a income outgoing form, they where most surprised they had to pay the mortgage with the money they paid to sky, bank told them they must cancel it, along with other non essential bills,magazine subs,amazon prime etc .
the-muffin-manFull MemberTakes about a year of non-payment of mortgage for the banks to turf you out.
I know someone who has had his mortgage paid (interest only) for at least six years. So there are even exceptions for this.
FunkyDuncFree MemberI thought redundancy payments meant you couldn’t sign on ? Certainly was the case when I was made redundant about 10 yrs ago
moomanFree Membersomouk – Member
I often wonder this myself, I’ve recently been looking in to redundancy insurance but that’s not the cheapest and normally requires you to wait a few months before you can claim off it.Save your money with that insurance. Its something like 3mths before you can claim it. By which time – if you are really looking for a job you will have found
something
.
And if you are not looking to find anything in the hurry … the terms are pretty tough to get out of (must apply for a certain amount of any sort of jobs a month, and take up any offer … and do all of it through the job centre).brFree MemberI thought redundancy payments meant you couldn’t sign on ? Certainly was the case when I was made redundant about 10 yrs ago
Eh? Never been the case, although if you had more than the savings limit you only got dole/jobseekers or whatever they called it.
I got laid off in 2008 with a goodly amounts, signed on as I wasn’t expecting to find work easily (senior and the financial crash). Got money for the six months allowed.
A pal at the same time got his mortgage paid for over a year, no savings and a non-working wife.
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