DWP benefit claimants caught short this winter can get £812 loan interest free

With the nights getting longer and colder in the run-up to winter, millions of Brits will find themselves spending more than they would like on heating at a time of year that is often expensive anyway. And with Christmas and the holiday season just around the corner, many of us can find ourselves strapped for cash at the worst possible moment.

But people who are receiving help from the Department for Work and Pensions (DWP) through the Universal Credit benefit system can get a much-need helping hand if they find themselves in this situation, as many have through the recent years of the cost of living crisis. Unlike banks or unscrupulous money lenders, this financial assistance is even offered free of interest and is called the Budgeting Advance loan.

Universal Credit claimants can take out 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 easier, as a smaller amount is deducted from your benefit payments every month.

READ MORE: Drivers issued £5,000 warning as clocks go back this weekend

However, it's crucial to remember that each of your Universal Credit payments will be lower due to these repayment deductions.

People claiming other benefits from the DWP may also qualify for a Budgeting Loan to help pay for essential items or services which they might otherwise struggle to afford due to their current circumstances, reports the Daily Record. Before considering taking out either of these loans, check with your local council for financial assistance, or unclaimed support as this will allow you to keep your full benefit payment.

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 be eligible for the loan, which is repaid through deductions from their benefits.

For older claimants who have transitioned from Universal Credit to Pension Credit, the DWP will add the time they were receiving Universal Credit to the six months

Easy-to-understand online guidance has been published which simplifies the process including eligibility, what it can be used for and how it is paid back to the DWP. So, what exactly is a Budgeting Loan?

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.