Financial Advice and Protection - The Value of Your Home


The most you can borrow is £910,000. And some companies will lend you only 60% of the value of your home.

In addition, your benefit from the scheme will depend on your other financial circumstances:

Income Support If you receive income support, the extra income from your home income plan will mean that your income support will be reduced or lost altogether. So a home income plan will not normally be worthwhile.

Housing Benefit If you get your rates reduced through housing benefit, this will be reduced by 80p for every £1 of your extra net income from the plan. In Mrs Brown's case that would reduce her housing benefit by 80% of £299.68, which works out at £19.86 a week. That may mean that a home income plan is not worthwhile.

Age Allowance If you lose part of your age allowance because your income is over £29,200, you will benefit particularly from an income plan because your total income for tax purposes will be reduced by the gross amount of the loan repayment before the tax relief is deducted. As a result your age allowance will increase.

Non taxpayer If your income is too low to pay tax, you will benefit slightly more than someone who pays tax at the lowest rate. You will still get the interest on the loan reduced as if you paid tax. But you will not have to pay tax on all the extra income. However, the extra income from the plan may mean that you have to start paying some tax.


More information

Financial Advice and Protection - Higher Tax Allowances


If you pay tax at the higher rate, you will benefit more than a standard rate taxpayer.
All these factors make it difficult to give any general rules about what people will receive. But Table 6 below shows typical net amounts for single men, single women and couples of various ages who pay tax at the standard rate of 89 % from a loan of 60000 The figures assume that the scheme is a fixed interest rate one and that you have taken out capital protection (this term is explained on webpage 87). If you get housing benefit or are on income support, your net gain will be less. If you pay higher rates of tax or no tax at all, or get a reduced age allowance because your . . . ... see: Financial Advice and Protection - Higher Tax Allowances