As the nights grow longer and colder in the lead-up to winter, millions of Brits will find themselves shelling out more than anticipated on heating during an already costly time of year. With Christmas and the holiday season looming, many could find themselves cash-strapped at the most inconvenient of times.
However, those receiving support from the Department for Work and Pensions (DWP) through the Universal Credit benefit system can receive a much-needed boost if they find themselves in this predicament, as many have during recent years of the cost of living crisis. Unlike banks or unscrupulous money lenders, this financial aid is offered free of interest and is known as the Budgeting Advance loan.
Universal Credit claimants can apply for a Budgeting Advance of up to £812 for an unexpected emergency, which was previously repaid over a 12-month period, but now claimants are being given 24 months to repay the full amount. This can make repayments more manageable, as a smaller sum is deducted from your benefit payments each month.
However, it’s vital to bear in mind that each of your Universal Credit payments will be reduced due to these repayment deductions.
The Daily Record reports that individuals receiving other benefits from the DWP may also be eligible for a Budgeting Loan to help cover essential items or services, which they might otherwise struggle to afford due to their current circumstances. Before considering these loans, it’s advised to check with your local council for financial assistance or unclaimed support, as this allows you to retain your full benefit payment, reports the Manchester Evening News.
Those who have been claiming Income Support, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance or Pension Credit for at least six months may qualify for the loan, which is repaid through deductions from their benefits. For older claimants transitioning from Universal Credit to Pension Credit, the DWP will add the time they were receiving Universal Credit to the six months.
Comprehensive online guidance has been published simplifying the process including eligibility, what it can be used for and how it is paid back to the DWP.
What is a Budgeting Loan?
A Budgeting Loan is money people who have been claiming the benefits mentioned earlier for at least six months can apply for financial help from the DWP.
It is important to be aware that because it is a loan, the money must be paid back and is done so through benefit payments.
Who cannot apply for a Budgeting Loan?
If you currently get Universal Credit, you cannot get a Budgeting Loan. Apply for a Budgeting Advance instead – full details on GOV.UK here.
You also cannot get a Budgeting Loan if:
- you get New Style Jobseeker’s Allowance or New Style Employment and Support Allowance
- you are involved in industrial action (for example a strike, walkout or lockout)
- you owe more than £1,500 in total for Crisis Loans and Budgeting Loans
Find out more about eligibility on GOV.UK here.
What can a Budgeting Loan be used for?
The loan is to help pay for essential things or services.
This might include:
- Furniture in your home
- Household white goods such as a washing machine, cooker, hoover or fridge
- Clothing or footwear
- Rent you have to pay in advance
- Any moving house costs such as a removal van
- Essential work needed on your home, including maintenance
- Security for your home, such as new keys or locks
- Some travelling costs in the UK
- Things that will help you get a new job, such as a suit for interviews or taxi fares to get to an interview
- Costs due to pregnancy and childbirth
- Costs for a funeral
How much you could get
The lowest amount you can borrow is £100.
You could get up to:
- £348 if you’re single
- £464 if you have a partner
- £812 if you or your partner claim Child Benefit
How much you could get depends on whether you:
- Can pay the loan back
- Have savings of more than £1,000 (£2,000 if you or your partner are 63 or over)
- Are paying back an existing Budgeting Loan or Crisis Loan
Paying the Budgeting Loan back
The money is paid back in full to the DWP at 0% interest within two years. When the DWP pays your benefit, it will take an amount off to help pay your loan off.
The amount taken depends on your total income, which includes any benefits you get and what you can afford. If you stop getting benefits, the rest of your Budgeting Loan must still be repaid.
If you can get a loan, the DWP will also tell you how much your weekly repayments will be from your benefits and if you accept, your weekly repayments from your benefit will start straight away.
How to apply
You can apply for a Budgeting Loan online or by post, however, the DWP guidance states: “You will get a quicker decision on your Budgeting Loan by applying online.”
What happens after an application is made?
The DWP will either send you an email, text or letter letting you know whether or not you can get a Budgeting Loan – you must request which method of notification when you apply.
But it’s worth noting if you requested a decision by email or text message, you will get this within seven days. If you asked for a decision by letter, it will be sent within 21 days.
How to accept a loan
If you can get a Budgeting Loan, you need to ‘accept’ the decision before you get the money.
How you ‘accept’ your decision depends on how you applied:
- If you applied online, you will get a text message or email telling you what to do
- If you applied by post, you can accept the decision by letter
Once you have accepted the offer
Once you have accepted the loan offer, the DWP will pay your money into your account, but when you get your money depends on how you accepted your loan offer.
If you:
- Accepted the loan offer online, you will get your money within seven days
- Accepted the loan offer by post, you will get your money within 21 days
If you gave the DWP your mobile phone number, they will send you a text message when they pay the money into your account.
To find out more about applying for a Budgeting Loan by post or how to appeal a decision, visit the GOV.UK website here.
