IS20 - A guide to Income Support

Your Income Support payment

How much help will you get? page 1 of 4

The Standard Rate
The standard rate is used to calculate the amount of eligible mortgage interest that is payable on a loan in Income Support. From December 2004 a new method of calculating the standard rate was introduced. [Legislation (80)]

The rate is based on the Bank of England Base Rate plus an additional percentage, currently 1.58%. The standard rate is used to assess all payments of mortgage interest and will stand at 7.08% from 13 January 2008.

This does not affect how offices calculate your benefit entitlement. However, the revised standard rate reflects changes in the Bank of England Base Rate quicker than the former standard interest rate. Any changes to the standard rate will be triggered when the Bank of England amends its base rate.

Abolition of 5% Rule
From December 2004 a lender’s interest rate will no longer be used to calculate benefit entitlement.

If your partner is aged 60 or over you will receive help from the first day your are entitled to Income Support

For people aged under 60 there is a waiting period before help with your housing costs becomes payable. The length of the waiting period depends on whether your housing costs are defined as “new housing costs” or “existing housing costs”.

New housing costs are defined as

• Home loans taken out on or after 2nd October 1995

If you have “new housing costs” there is a waiting period of 39 weeks before help is provided towards your housing costs.

Existing housing costs are defined as

• Home loans taken out on or before 1st October 1995.

If you have existing housing costs you will receive no help with them for the first 8 weeks; half of your eligible housing cost for the next 18 weeks, and then all of your eligible housing costs.

Remortgaging rules
From November 2004, the current restrictions on remortgaging have been extended. This means that if your existing mortgage is a pre-October 1995 loan, you may continue to have your housing costs treated as “existing housing costs” provided:

• your loan is for the same amount or less than the original loan, and
• you were named as a party to the original pre- October 1995 mortgage

However, you may remortgage

• with a different lender,
• for any property and this will allow for changes of names on the mortgage to take account of marriage or divorce.

For customers over the age of 60, housing costs are paid from the outset of the claim.

If you have new housing costs you will receive no help with them for 9 months (39 weeks) and all your assessed housing costs after that.

• If you have both new and existing housing costs you will receive amounts for your existing housing costs from the 9th week and for your new housing costs from the 40th week.

If you are in one of the following groups and have new housing costs they will be treated as existing housing costs:

• carers where the person being cared for is in receipt of, or has claimed, Attendance Allowance or Disability Living Allowance with a care component at the highest or middle rate
• prisoners detained in custody pending trial or sentence
• people whose insurance policy for their mortgage will not pay because their claim is the result of a pre-existing medical condition or an HIV-related illness
• people with children who have claimed Income Support because their partner has died or abandoned them.

You can start to serve your waiting period before you are entitled to Income Support
Any period when you have been entitled to contributory Jobseeker's Allowance, Statutory Sick Pay or Incapacity Benefit because you are incapable of work will count towards your waiting period when you claim Income Support if, during that period, you were not entitled to Income Support solely because you had capital over £16,000 or because of the money you had coming in. [Legislation (81)]

If you are a single parent or carer who has had a claim for Income Support refused solely because you had capital over £16,000 or because of the money you had coming in, and you make another claim within 39 weeks, the intervening period will count towards your waiting period as long as you, or your partner if you are a carer, have not been engaged in remunerative work, excluded from Income Support because you are a student, or excluded from Income Support because you are temporarily absent from Great Britain.

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