HOME TRUTHS

MORTGAGE ON THE DOLE

The company I work for has announced that there may be job cuts this year, and I am worried that I might lose my job. Would the DSS pay my mortgage while I was unemployed?

If you do lose your job it is possible that you may be entitled to some state assistance. The timing and amount of benefit you would get from the DSS depends on the type of mortgage you have, when it was taken out and whether or not you have an insurance policy that includes cover against redundancy. If you do have such a policy - often known as Mortgage Repayments Protector or Accident Sickness and Unemployment policies - then you should contact the insurance company as soon as your circumstances change. They will tell you if you are eligible and how much you will receive.

Secondly, you should contact your local DSS benefits office and explain your circumstances. They will provide you with details of the benefits which you are entitled to. However if you took out your mortgage after 1 October 1995, you will not normally be entitled to government assistance for the first nine months following redundancy. Therefore it makes sense to take out your own protection policy. These are normally initiated when you first take out your mortgage, but if you did not do so, contact your mortgage lender as they may be able to arrange one now.

Finally, you should make sure that you keep your mortgage lender fully informed of what is going on. It will be easier for them to help you and work out a solution if they are made aware of potential problems sooner rather than later.

THE MIRAS TOUCH

There was some speculation recently that Miras would be withdrawn at the next Budget. What is it? And how does it benefit me?

Miras stands for Mortgage Interest Relief At Source. It has been effective since April 1983. It gives borrowers tax relief on the interest they pay on their mortgage, up to a maximum of pounds 30,000 at a rate of 15 per cent, without any adjustment to tax codes or assessment.

The amount of Miras you receive depends on the size of your mortgage and the interest rate which is being charged. At a current standard mortgage rate of 7.95 per cent, the maximum amount of Miras you would benefit from each month would be pounds 29.81. If your loan was less than pounds 30,000 the benefit would be smaller. However if the interest rate on your loan was higher than average, say 10 per cent, the level of benefit received would be greater at pounds 37.50.

You can work out your monthly Miras benefit by doing the following calculation: size of loan (max pounds 30,000) multiplied by the interest rate payable. Divide this by the current Miras rate (15 per cent). Then divide by 12 to give the monthly allowance.

OWN BOSS, OWN HOUSE?

I have been self-employed for a couple of years and would like to take out my first mortgage. My friends have said that I won't be able to get a mortgage with a bank or building society because I haven't got three years audited accounts. If this is true, is there any way around it, or do I have to wait?

Most mortgage lenders do have guidelines that say that for self-employed customers they would want to see certified accounts for the last three financial years. However, these are only guidelines and does not mean that they would not help. Each lender will have their own guidelines. NatWest for example, would want to see the two years certified accounts and then a set of projected accounts from your accountant. We would then be able to assess your circumstances and agree a figure which you should be able to comfortably afford. Some lenders do have more restrictions for self-employed customers, and it makes sense to shop around for the best deal.

George Wise is managing director of NatWest UK Mortgage Services