If you claim certain benefits, you can apply for a loan from the Department for Work and Pensions (DWP) 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 for an SMI loan:
- 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 SMI to help with paying the interest on mortgages up to:
- £200,000 if you're of working age
- £100,000 if you get pension credit
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.
The government calculates how much you're entitled to and makes monthly payments direct to your lender.
If you got SMI payments before April 2018
Before April 2018 SMI was paid as a benefit. You did not have to pay it back.
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 government) 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.
Get 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.
How to apply
When you claim a qualifying benefit, you’ll be asked questions about your housing situation to check if you’re eligible for an SMI loan.
The DWP, Jobcentre Plus or Pension Service will contact your lender to confirm the details.
You don't have to claim it separately, but you will have to sign a loan agreement form.
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
Payments are not made during the first:
- 9 months of a universal credit claim
- 39 weeks of a claim for income support, jobseeker’s allowance, employment support allowance
You can get SMI payments straight away 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.
How you repay the loan
Unlike most loans, you don't make monthly repayments so an SMI loan shouldn't affect your day-to-day budgeting.
The loan payments are secured on your home at an interest rate of 1.5%. This rate may change on 1 January and 1 July every year.
You’ll only need to repay the loan and interest when you:
- sell the property
- transfer ownership to someone else
If there's not enough equity in your home to repay the full amount when you sell, 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.
Still need help?
Contact Citizens Advice for help with benefit or debt problems:
If you have mortgage arrears:
Last updated 16 Jan 2019 | © Shelter
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