Will help to take on a mortgage improve your life?

Details: Published: 10 June 2022

There has been a great deal of publicity this week about the government’s plans to help claimants to take on a mortgage. However, no-one seems to have asked claimants what they think of the idea . . . so we thought we would. Please take part in the poll below.

The plans announced include:

Extending the right to buy to 2.5 million housing association tenants.
Turning ‘benefits to bricks’. This proposal involves changing benefits rules so that the 1.5 million people who are in work but also on housing benefit will be given the choice to use their benefit towards a mortgage, rather than automatically going directly to private landlords and housing associations.
Changing universal credit (UC) rules so that claimants can save more than £16,000 without it affecting their UC, so long as they put it in a Lifetime ISA to go towards a deposit on a house.
A review of the mortgage market to try and increase availability of low cost, low deposit finance such as 95% mortgages.

Secretary of State for Work and Pensions Thérèse Coffey said:

“For too many people the aspiration to own their home has been taken away. By turning benefits to bricks, we are opening the door to home ownership for those on the lowest incomes.

“By removing barriers and allowing people on benefits to save into a Lifetime ISA, they will be incentivised to put aside a deposit to buy their home.

“And we are also giving people the choice to use their benefit towards their mortgage rather than on rent that pays a buy-to-let landlord.”

Will these new ideas improve your life? Vote in our poll and leave a comment to explain why you voted the way you did.

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Amanda · 1 years ago
Reading this irritates me. When I had my car accident I owned my own home and had a low mortgage since I invested heavily into my property. Unfortunately, it was a terrible time to sell and rent costs were higher than my mortgage costs, they would only pay the interest for so long and I was forced to sell during a bad market dip. Then housing benefit ended up paying even more to help me rent somewhere than they would have just covering my mortgage (a financial net they would have benefited from long term themselves when I was retirement age). Sometimes there's no rational to the decision making process.

If they had just paid the mortgage on my home it would have been paid off by now and would have saved them a fortune in ongoing rental costs overall. Instead I was pushed into selling in a bad market and losing literally 70k+ profit. Meanwhile, the taxpayers are now picking up the tab for my rent which is inevitably an ongoing cost to the Gov (taxpayer). The lack of logic is quite mind blowing.

As regards new buyers on the market? I'm unsure. Its a huge undertaking and I havn't researched the pro's/cons enough to comment.
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  Stephen Baxter · 1 years ago
  
  @Amanda I agree with you that the existing system is just not flexible enough and has too many arbitrary limits. What people on Social Security want is greater financial security and by implementing Universal Basic income more people would be enthusiastic about employment.
  
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Bev · 1 years ago
It will take much needed housing stock which will mean less housing for people to rent.
There has got to be a catch, with this Government there always is. What happens when people lose their benefits? Most of us on benefits constantly worry our benefits can be cut at any time. While people who wait years like I did for appeals to go to Tribunal will have their benefits cut. If you own a home and don’t pay the mortgage you lose your home and all the money put into it. There will be countless people made homeless with no housing as they have all been sold off!
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Paulina · 1 years ago
Depends; if the goalposts get moved afterwards ref said benefits one could be left high a d dry and NO alternative housing having moved 'voluntarily' into private home ownership! I had a friend who bought under Thatcher's drive to home ownership then ended up in negative equity in 1992 crash, followed by 2008 crash. It is a honey trap and playing to the idea that home ownership is somehow a panacea for all other ills on this country at present.
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Angela Glasper · 1 years ago
I don't trust Tories; I'm on benefits and own my own home. I have been on benefits for over ten years but I couldn't claim on any relief for the mortgage for 9 months, so I used my savings and when I became eligible I got £36 per month because I could only claim for the interest on the loan, however I had to pay over £100 per month out of my benefits. In 2016 they decided to abolish this and said it would be considered a loan for which I would have to pay back plus they would be named as a interested party on the mortgage deeds. I decided to pay the full amount myself as the mortgage will be paid off in a few years. This policy is an ill thought out proposal like most of the Tory bulls*** to distract from the negative press that Boris has generated.
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Elaine · 1 years ago
I would say yes, I purchased my house 3 month before becoming too ill to work, however as I had purchased my house from my local council which was at a highly discounted amount, my mortgage payments were roughly half of my rent payments, so I was able to put a bit aside for any repairs that were needed & pay a bit more to my mortgage each month, my mortgage is now only 6 months off being fully paid, which of course gives me extra money each month, not having that to pay, and I have my own home which I could sell, leave to my son after I'm gone, and it makes me feel more secure and in charge of my own destiny. I do realise that this would not be suitable for everyone, but it did benefit me, and I think everyone should at least be able to decide if it is a suitable thing for them if it's not then they don't have to take up the offer, but at least everyone has that choice for what suits their personal needs.
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Deb · 1 years ago
The issue with having a mortgage is that if you own the property with a mortgage. You are then responsible for the costs for all and any repairs that need doing. And there is no way that you can afford this on benefits.
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brownpaperbag18 · 1 years ago
No. Scheme aimed at younger tenants (LISA). Takes needed homes out of the HA stock that are unlikely to be replaced.

Anyone taking this up still has the service charges if it is a flat and the maintenance costs. Could be hit with a major bill in tens of thousands if major works needed to the block of flats. The question as ever - will the ownership be freehold or leasehold. If the latter watch out.

For those who want to be easily evicted when they can't pay the escalating costs of property ownership.
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Kathy · 1 years ago
Right to buy will give Lessees more power. My housing association is hopeless at dealing with anti-social behaviour. Many of my HA neighbours care little for the communal aspects of their homes or neighbours, and some actively trash it. The HA is weak and seems to have the attitude that we are all social housing people so why bother dealing with these problems, so things get even worse. It will give us the freedom to move from such people too. It will also allow my son to have my home, which I have greatly cared for, and which he grew up in, once I am gone.
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  Mark W · 1 years ago
  
  @Kathy I’m not sure why you think the right to buy would give more power to lessees. When I read what people say on Trustpilot about my own HA it seems that lessees are treated no better than tenants and are liable for ever-spiralling service charges. True, you can move away eventually, if you can find a buyer for your property, but such is the indifference and incompetence at the HA that getting them to deal with the necessary legal paperwork can take months.
  
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  Stephen Baxter · 1 years ago
  
  @Kathy I agree that many housing associations provide a poor service. I would like to see tenants given the opportunity to take a financial stake in their housing association and consequently take a role in managing the association. The levels of Social Security should be increased so that we have the money to finance this and the arbitrary £6000 limit on savings abolished.
  
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Notavailable · 1 years ago
I am very concerned and upset by these proposals. Why is it okay for one group to be allowed to use the LHA for their mortgages, but not the disabled? Why do we have to take out the SMI loan? Being a mortgage prisoner I am stuck with an SVR interest rate that is escalating almost every month. The SMI loan does not even cover 20% of the interest on my mortgage subscription. I cannot sell. I cannot remortgage. I cannot rent. I cannot access social housing, despite a medical need.
Taking away housing from an already well oversubscribed stock, seems like utter madness. Why can't this scheme be introduced for new housing, or a one out, one in requirement be imposed?
These new buyers, if they become unemployed or disabled will face the stress of arrears building waiting for the SMI loan to kick in. Then there is no interest only mortgage option (unless older) so they will have to find the difference between their interest and full mortgage subscription. Many will be forced to work, even if significantly disabled, just to hold on to their homes - could this be deliberate? Then there's the whole leasehold issue - so many who bought social housing stock flats last time have faced huge 'maintenance' bills for their properties. One housing association landlord put the full cost of repair work onto the property owners subsidising their costs for repair - owners were faced with £00,000s in repair costs. They were caught. All I can say is 'buyer beware'. Check every detail, check again and go with a High Street lender!
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George · 1 years ago
It would be just another (big) thing to worry about. What will happen if, as usual, I am refused the benefit (or part of it) when it comes up for renewal and have to go through the stressful process of appealing?
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As · 1 years ago
Sounds to me like a trap door to hell !
At a time when the cost of living is at an all time high and everyone is struggling financially.
The Government think this is a good idea ??
I for one am extremely suspicious of their motives .
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  Klaus · 1 years ago
  
  @As Yes, I think, they truly attempt to trap people
  
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Peter · 1 years ago
Just like the American sub prime mortgage scandal circa 2005, this crazy plan is doomed to failure. The whole idea of council housing is to provide homes for those who can't afford to buy their own. Don't decimate council housing stock. That's what Thatcher did and they've never replaced them since.
They never will replace them, successive governments have realised that a housing shortage keeps house prices high, keeps employment high and builders rich. If you buy your own house, they will take the equity to pay for your care in retirement, so what's the point in buying anyway?
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David Moore · 1 years ago
With the already cruel act imposed by Thatcher, which has destroyed the social housing stock, surely adding to that horrendous failure is just compounding the disaster!
Let's hugely magnify the rebuilding of that stock, preferably on brownfield sites, so that all can be entitled to have a roof over their heads.
Any private housing development must also have a better percentage of low priced starter homes with mortgage and deposit thresholds lowered.
To help fund these vital measures an annual wealth tax on the top 10% of the population would be a simple solution.
Planet and people before profit!
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Nicky · 1 years ago
Will improve my very low self esteem to own my own flat. I am 57, brought my son up alone with no partner or family network. He too, like myself, got a degree from university. I am now on ESA and PIP.
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  Denise · 1 years ago
  
  @Nicky Omg I thought for 1 second i had commented already!.
  Yes I get where Nicky is coming from. we have very similar views, we also same age.!! Same circumstances but i have 4 children all grown up now tut.. I proper grafted for years with me myself and my 4 children...I worked twice as hard and twice as long as any 1 else I knew and juggled 4 children I think this is a great idea! It gives those at the bottom of the heap those who 2 be fair probably works very long hours for very little money! And very little vision this if done correctly it will be a massive confidence boost for those either alone or all those hard workers with no qualifications on minimum wage.
  
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C.Melling · 1 years ago
Personally I would prefer to continue renting from the housing association and knowing all repairs/maintenance is covered.Also I find the decision bizarre when there’s already a shortage of social housing
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Henrietta Hastings · 1 years ago
People in receipt of benefits are already on the lowest possible income, and whilst owning your home is a lovely idea, there are financial liabilities that come with home ownership which do not affect people renting: maintenance, some service charges, liability for major structural repairs eg replacement windows to a block of flats. How could people on benefits pay for these things? I also disagree with selling off council homes. The current waiting lists are endless, why reduce the opportunities for secure rented accommodation even more? If the government do go ahead with this scheme it would be better to allow people to buy in the private sector than selling yet more council housing. Thirdly, benefits change, as does entitlement to benefits, what happens if someone’s benefits are suddenly reduced or removed altogether? Lastly, some benefits such as pip, dla and child benefit are already taken into account by many lenders, so the government is really only talking about universal credit, which is very precarious indeed.
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Vashti · 1 years ago
In theory I like the idea of owning my own home - who wouldn't? But what about all the additional costs that go along with that? What am I supposed to do if there's damp or the roof blows off? Right now all that is my landlord's responsibility - I couldn't afford to own a house even if someone bought me one.
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Justin · 1 years ago
I have worked my whole life, Firstly as a farm hand and mechanics mate from the age of around 9. Since then I qualified as an electrician, moved into IT & network cabling and joined the fire service as a retained firefighter. I have never been able to afford a mortgage, (I live in Devon!). Then in 2008 I had an accident and have ended up with long-term chronic pain which prevented me from working for around 4 years. Then in 2012 I was put on meds (Tapentadol, Gabapentin & Naproxen) and was able to consider working again in an office-based role, which I have done ever since. However, I am still unable to afford a mortgage and am now 50, so ineligible for a longer-term mortgage. If the option to pay a mortgage or have the right to buy on my housing association property had been available I would have taken it from the age of around 22.
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  Pete · 1 years ago
  
  @Justin I'm from Devon myself. When I was 18 I was working about 30 hours a week and could quite easily afford a mortgage. I mean okay mortgage rates were around 5% but in the late 90s it only cost about £40k for a three bed terrace house in the part of Devon I lived.
  
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Anonymous · 1 years ago
Sometimes a mortgage can cost equal or.less then rent money. Especially of you have to pay bedroom tax for each empty room, it soons adds up to the equivalent of a mortgage. Yet because your on benefits of a carer or low income your denied. There's been proof many have been paying hundreds over the odds on rents to a mortgage. The only issue now tho is it's impossible to save a deposit even for a working person
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Ian · 1 years ago
Too little too late for me.
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