Your peers are buying their first homes, getting married, or acquiring more space for the children who are on the way. Meanwhile, you are stuck in limbo. Not because you want to be, but because a traffic accident or medical error has turned your life upside down.
We regularly hear this feeling of stagnation from our clients. And it affects us. Because behind every personal injury case there is always an ordinary life — with wishes, plans and dreams that continue as normal.
Buying your own home is often one of them.
How benefits can get in the way of your mortgage
Anyone who becomes completely incapacitated for work as a result of an accident will usually receive an IVA benefit. IVA stands for Income Provision for Persons Who Are Completely Incapacitated for Work: a benefit of 75% of your last salary, up to a statutory maximum.
This has a direct impact on how much you can borrow. Banks base the maximum mortgage on your income. Someone who could get a mortgage of €400,000 before the accident with a good salary will have considerably less borrowing power with an IVA benefit. In the current housing market, a difference of, say, £100,000 can easily mean the difference between a suitable home and one that is simply not feasible.
In addition, there are two other consequences that do not always receive the attention they deserve in personal injury proceedings.
Due to the accident or medical error, someone has often been unable to save money for years. They simply do not have any personal funds to supplement their mortgage. And those who had built a career without the accident would now be earning more than they did in the year of the accident. That wage development is not taken into account in an income assessment.
These are side effects of the accident that are not immediately apparent, but which have a major practical impact in the long term.
What we have been able to arrange for our clients
Personal injury law is essentially based on one principle: restoration to the situation prior to the accident. Not only financially on paper, but also in daily life.
If someone had already purchased a home without the accident, or would reasonably have done so in the coming years, that loss is part of the total damage. It is part of the deal.
In several cases, we have found liable parties willing to pay a substantial advance, enabling our client to purchase a home after all. Such an advance, referred to in legal terminology as an advance “under general title”, is an interim payment on the total compensation yet to be determined. It enables someone to take action without the final settlement having to be completed.
The result: a client who was able to go through a stage of life that their peers had long since reached. Small in legal terms. Big in real life.
Two points to note that you should not overlook
Using a deposit to purchase a property entails two practical risks, which we always explain clearly to our clients.
- Money tied up in bricks and mortar is no longer free money. An advance on future costs, such as domestic help or medical care, is no longer immediately available when purchasing a home. These costs must then be borne by the individual, from their benefits. This requires a realistic calculation in advance.
- Compensation and a shared home: sometimes a complicated mix. If part of the compensation is used to buy a home with a partner, it is often difficult to prove which part of the purchase price came from whom in the event of a divorce. This is particularly relevant if there is no prenuptial agreement or cohabitation contract. We advise our clients to seek legal advice from a specialist in good time and are happy to help with a warm referral.
What this could mean for you
In every case, we look not only at the direct damage, but also at the broader question: where would you be now if this had not happened? Sometimes that question leads to an insight that makes a world of difference.
Do you have questions about your situation, or would you like to know whether an advance payment for the purchase of a home is something that is possible in your case? Please contact us.