The wonderful taxpayer funded two-year interest free mortgage holiday will be asset means tested of course; "... only those with less than £16,000 worth of savings will be eligible."
Er, right, so Mr & Mrs A have a mortgage of £384,000 and no savings, their income has dropped, so they're eligible. Mr & Mrs B next door have exactly the same circumstances, but their mortgage is £400,000, and they would be eligible but for the fact that they also have £16,000 in savings.
Notwithstanding that people who have a large mortgage and a lot of savings are daft anyway (you usually pay more interest on your mortgage than you earn in interest), what is Mr & Mrs B's most likely course of action:
a) Make sure the savings are with a different bank to the one holding the mortgage and "forget" to mention it when applying for the interest-free holiday?
b) Use the £16,000 to make a one-off mortgage payment and apply for the interest-free holiday straight away?
c) Use up the £16,000 savings to cover the next eight months' mortgage payments and then apply for the interest-free holiday?
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As a separate issue, asset-based means testing is even more evil that income-based means testing. There is a taper applied to most UK benefits, if you have savings of £16,000 or more (or £8,000 for some benefits). Given that you are only earning a few hundred pounds a year in interest on that level of savings, this is an effective marginal tax rate on savings income of several thousand per cent.
Friday, 5 December 2008
Just how stupid are they? (Part 94)
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7 comments:
How about this for moving beyond stupid into scary?
I think we've been looking at the Government bail out for delinquent borrowers thing the wrong way round. This is in fact a house price support/bank saving policy. It has nothing to do with helping delinquent borrowers at all.
Consider, if next year there are 76,000 properties repossessed by banks, (and these properties are likely on high LTV's, and now in negative equity, and I think it will be a lot more repossessions than forecast) the banks have a huge problem. They can't sell the houses unless they pretty well give them away. All the costs of sale and any capitalised arrears will be added to the banks costs. They can't rent them out to wait for better times as (a) there may not be better times (b) such a flood of properties on the rental market would depresss rents and (c) the banks need cash, not houses. It's no good pursuing the borrower for the shortfall - they'll just emigrate or just not care and make themselves bankrupt.
One idea might be to extend the sale and rent back idea to include banks and force them to become landlords. Then the Government transfer payments made to tenants to enable them to pay the rent - which they'll need as they can't pay the mortgage - would at least go to helping the banks deal with the loan defaults.
L, of course, it is purely yet another feeble attempt to prop up house prices. The gummint don't even care about the banks, they just have to stave off the worst of the crash until after the snap general election early next year. Possibly timed to coincide with EU-elections to depress UKIP's share of the vote.
It kept Damian Green and the Labour ferreting off Radio 5Live for a couple of hours though.
Fuck the economy. Job done.
(prehaps I should have made clear that would be ZNL's opinion, not mine)
Put it on a long odds horse. They might win £160,000 & the authorities have no way of guessing it exists. And of course, unlike gambling on the stock market, it isn't taxable income.
Shit, I just clicked Obo's link. What may seem minor and arcane is indeed rather scary.
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