Support for mortgage interest payments (SMI)

Support for mortgage interest (SMI) can help with mortgage payments. From 6 April 2018 SMI is only offered as a loan. It must be repaid if you die or sell your home.  

Support for mortgage interest (SMI)

Support for mortgage interest (SMI) can help some homeowners with the following housing costs:

  • mortgage interest payments for the home you live in
  • ground rent and some service charges for leaseholders  
  • loan interest repayments for essential repairs, improvements or disability adaptions

SMI was previously paid as part of a benefit claim and did not have to be repaid.

From 6 April 2018 SMI is only offered as a secured loan from the Department for Work and Pensions (DWP). This applies to new and existing claimants.

How an SMI loan works

The DWP calculates how much SMI you're entitled to and makes monthly SMI payments direct to your lender. 

These payments are secured on your home at a variable interest rate - currently 1.5%. 

You must repay the loan (and interest) if you:

  • die
  • sell the property
  • transfer ownership to someone else

If there's not enough equity in your home to repay the full amount, the remaining balance is written off by the DWP.

Unlike most loans, you don't make monthly repayments so an SMI loan shouldn't affect your day-to-day budgeting. 

If you got SMI payments before April 2018

You should have received a:

  • letter from the DWP which explains the change from a benefit to a loan
  • call from a company called Serco (on behalf of the DWP) to discuss your options  

Contact Serco on 0800 046 8333 if you haven't spoken to them yet. You won't receive any more SMI payments unless you agree to an SMI loan. 

If you decide to accept the offer of an SMI loan, Serco will send you a loan agreement form to sign. You must sign and return the form within 6 weeks of receiving it.  

Find out more about the changes and how to respond from Citizens Advice

How to apply for an SMI loan

You must claim one of the following benefits to get an SMI loan:

  • pension credit
  • income support
  • jobseeker's allowance (income-based)
  • employment and support allowance (income-related)

SMI is part of your claim for a qualifying benefit. You don't have to claim it separately but you will have to sign a loan agreement form.

Call Jobcentre Plus on 0800 055 6688 to claim working-age benefits

Call Pension Credit claim line on 0800 99 1234 to claim pension credit

You'll be asked about your mortgage and housing costs when you make your claim. Jobcentre Plus or the Pension Service will contact your lender to confirm the details. 

If you claim universal credit 

You can sometimes get a housing costs element to help with interest payments on your mortgage and any secured loans. This is also offered as an SMI loan but the rules are slightly different than for other benefits.

Get money advice and discuss your options

Before you agree to an SMI loan, you should get independent money advice. A money adviser can explore whether you have any other options for repaying your mortgage. 

Contact the Money Advice Service on 0800 138 7777

Waiting times for SMI payments

If you accept the SMI loan, payments towards your mortgage interest are made by the DWP direct to your lender.

You won't get any SMI for the first 9 months of a claim for a working-age benefit. 

There's no waiting period if you claim pension credit.

Talk to your lender if you fall into arrears while waiting for SMI payments to start. Lenders are aware of the SMI rules and may be prepared to delay repossession action. 

Mortgage or loans covered by SMI payments

You can only get SMI to help you pay interest on certain types of mortgage or loan.

You must have taken out the mortgage for the sole purpose of buying the home you live in. If you took out a mortgage or secured loan for another reason, such as starting a business or buying a car, these interest payments won't be covered.   

You can only get SMI to help with interest payments on mortgages up to:

  • £200,000 if you're of working age
  • £100,000 if you get pension credit

If your mortgage is higher than this, you can still get partial help up to these limits.

If you took out your mortgage while claiming benefits

You can't usually get SMI unless the mortgage was:

  • a remortgage (SMI will be calculated based on the size of the original mortgage)
  • for essential repairs, improvements or disability adaptions (SMI can be calculated on the increased amount)

Capital repayments

SMI payments won't repay any of the capital you borrowed or pay towards any investment linked to your mortgage (such as an endowment policy, pension or ISA).

Interest rate used to calculate SMI payments

The DWP uses a standard rate of interest to calculate the help you get with your mortgage interest. 

The standard rate of interest is:

  • 2.61% from 18 June 2017
  • 3.12% from 6 July 2015

Check GOV. UK for any changes to this rate.

SMI payments won't cover your full monthly mortgage interest if your actual interest rate is higher than the standard rate of interest.

Still need help?

Contact Citizens Advice for help with benefit or debt problems:

Search for your local Citizens Advice

If you have mortgage arrears or other housing problems:

Contact a Shelter adviser online, by phone or in person

Last updated 10 Jan 2019 | © Shelter

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