If you claim certain benefits, you can apply for a government loan known as support for mortgage interest (SMI) to help with mortgage payments.
What an SMI loan can help with
A support for mortgage interest loan can help with interest payments on:
- a mortgage for the home you live in
- loans for essential repairs, improvements or disability adaptions to your home
SMI is a loan not a benefit and must be repaid
Who can apply for a loan
You must claim one of the following benefits to qualify:
- universal credit - if you're not working
- income support
- jobseeker's allowance
- employment and support allowance
- pension credit
Normally the homeowner applies for the loan.
You can apply for a loan if the homeowner is not paying the mortgage and you’d be at risk of eviction if the mortgage is not paid.
For example, if your former partner owns the home but has moved out and is not paying the mortgage and you can’t make other arrangements.
What you’ll get
You can get help with paying the interest on mortgages up to:
- £200,000 if you're of working age
- £100,000 if you get pension credit
The government calculates how much you're entitled to and makes monthly payments direct to your lender.
A standard interest rate is used to calculate the amount of interest you can get help with. The rate is currently 2.61%.
SMI payments won't cover your full monthly mortgage interest payments if your actual interest rate is higher than this.
Get advice and discuss your options
A debt adviser can explain your options but only a regulated financial adviser can recommend an SMI loan as a suitable product for you.
How to apply
If you're not already getting a qualifying benefit, you need to apply for:
- universal credit if you or your partner are working age
- pension credit if you and your partner are both pension age
You’ll be asked about your housing situation to check if you qualify for an SMI loan.
Jobcentre Plus or the Pension Service will confirm the details with your lender.
You have to sign a loan agreement form if you agree to take out the loan.
If you’re already claiming a qualifying benefit, contact the office that pays it to ask about applying for an SMI loan.
Waiting times for SMI payment
You can't get SMI payments for the first 9 months of a benefits claim if you or your partner are working age.
You can get SMI payments straight away if you claim pension credit.
Talk to your lender if you can't pay your your full mortgage instalment while you're waiting for SMI payments to start.
Your lender should delay repossession action if your finances are due to improve.
How you repay the loan
You don't have to make regular repayments on an SMI loan so it shouldn't affect your monthly budget.
The loan payments are secured on your home at an interest rate of 1.3%. This rate may change on 1 January and 1 July every year.
You usually have to repay the loan and the interest when you:
- sell the property
- transfer ownership to someone else
If you die and you don't live with a partner, the loan and interest will have to be paid back by whoever inherits the property.
If you live with a partner, they won't have to repay the loan when you die but will have to pay it back when the property is sold.
If there's not enough equity in your home to repay the full amount, the remaining balance is written off.
You can also choose to pay money back at any time. The minimum amount you can pay back is £100.
Last updated 06 Nov 2019 | © Shelter
If you need to talk to someone, we’ll do our best to help