MEANS TESTED BENEFITS

Your provider must document your tax position and entitlement to means tested benefits and assess whether you are better or worse off by starting a Lifetime Mortgage or Home Reversion. The increased income or lump sum from a Lifetime Mortgage or Home Reversion scheme could affect the amount of means tested benefit the client(s) receive.

Pension Credit
This benefit comprises of two separate elements, the Guarantee Credit and the Savings Credit.

The Guarantee Pension Credit
Guarantee Pension Credit is available to households in which the eldest adult is 60 or more.
Guarantee Pension Credit ensures that a minimum weekly income of £119.05 (for married couples this figure increases to £181.70). These thresholds will increase where the client is entitled to extra allowances for severe disability, carers or housing costs
If the client has capital in excess of £6,000, notional income will be assessed on the basis of £1 of income for every £500 of capital over £6,000.
Guarantee Pension Credit benefit is reduced pound for pound as income increases. It also acts as a passport to Council Tax Benefit, i.e. recipients of Guarantee Pension Credit are more likely to receive Council Tax Benefit. Clients may also be entitled to health service concessions such as free dental treatment and help with the cost of glasses, clearly if these concessions are lost then replacing them may incur additional costs for the client.

The Savings Pension Credit
This benefit is designed to provide an additional reward to those who have made some private provision to support them in retirement.
Savings Pension Credit is available in households in which the eldest adult is aged 65 or more.
The maximum value of savings credit is £19.05 per week for a single person or £25.26for a couple at April 2007 rates.

Council Tax Benefit
This is a means-tested benefit operated by local authorities with housing responsibilities.
If a client is in receipt of Guarantee Pension Credit they are more likely to qualify for Council Tax Benefit.

For further information, please call us on tel: 01268 573 306 or email us

State Benefits – Summary

As a general rule, the greater the impact on any benefits that the you are entitled to, the less likely it will be that Equity Release will be appropriate for you. This is because, in practice, they will only receive a proportion of the funds that they are releasing. The remainder will be lost through a reduced level of state benefits. Consequently it will be more important in any cases where state benefits are in play to ensure that all options other than Equity Release are investigated in detail and clearly discounted.

If you are looking to take a lump sum to help with home improvements you should contact your local authority or the Home Improvement Trust to see whether they may be eligible for a grant.

The DWP website (www.DWP.gov.uk) provides full guidance on the eligibility criteria for the main benefits outlined above. Business Assurance are also able to discuss with you the likely impact in specific cases and provide guidance as to whether Equity Release will be considered appropriate prior to submission for pre-approval.