Support for mortgage interest (SMI) loans
Support for mortgage interest (SMI) is a loan from the DWP.
It is not a benefit. You have to pay it back with interest.
An SMI loan may be better than other loans because you do not have to repay it monthly.
This page tells you:
who can get an SMI loan
what it helps with
how much help you can get
how to get an SMI loan
when it has to be paid back
Who can get an SMI loan?
You must get one of the following benefits:
universal credit (UC)
pension credit
income support
income-based JSA
income-related ESA
From 3 April 2023 you can get SMI payments if you are working while on universal credit.
Normally you can only get an SMI loan if the mortgage is in your name and you live there.
Sometimes you can get an SMI loan if the person responsible for the mortgage is not paying. For example, if your ex partner stops paying and this puts you at risk of losing your home.
Waiting times for SMI payments
From 3 April 2023 you can get SMI after you've been on UC for 3 months.
Talk to your lender if you cannot afford your full mortgage payment while you're waiting for SMI payments to start.
They should delay repossession action if your finances are due to improve.
You can get SMI straight away in these situations:
you get pension credit
you were on pension credit but claim UC within a month of starting to live with a working age partner
you reclaim UC within 6 months of your previous UC claim ending because you stopped qualifying for it
What does an SMI loan help with?
An SMI loan gives you some money towards your monthly mortgage interest.
It is unlikely to cover your full interest payments and does not cover any capital repayments.
You can only get help with interest payments on mortgages up to:
£200,000 - if you are working age
£100,000 - if you get pension credit
Your total mortgage can be more than this but you can only get help up to these amounts.
If you get universal credit
You can get help with interest payments for any mortgage or loan secured on the home you normally live in.
If you get pension credit or another benefit
You can only get help with interest payments on a:
mortgage for the home you normally live in
loan for essential repairs, improvements or disability adaptions to your home
If you take out or increase your mortgage or loan while on pension credit, ESA, JSA or income support you cannot usually get an SMI loan.
The only exceptions are if you get a new mortgage to help:
pay off another mortgage taken out before you claimed benefits
buy a home better suited to the needs of a disabled person in your household
buy a larger home so 2 children of different sexes do not have to share a bedroom once over the age of 10
If you have an Islamic mortgage
You can only get an SMI loan if you get universal credit or pension credit.
How much SMI can you get?
The DWP pays the SMI direct to your lender each month.
They use a standard interest rate to work out how much to pay.
This is usually lower than your actual mortgage interest rate.
The standard interest rate is only 2.65% at the moment even though other interest rates have increased recently.
How do you get an SMI loan?
You'll be asked about your mortgage costs if you apply for UC or pension credit.
You have to sign a loan agreement if you decide to take out an SMI loan.
Get advice and discuss your options
A debt adviser can help if you are finding it hard to pay your mortgage.
Only a regulated financial adviser can tell you if an SMI loan is suitable for you.
Find a regulated financial adviser on unbiased.co.uk
When do you repay an SMI loan?
You only need to repay the SMI loan plus interest if you:
sell your home
transfer ownership to someone else
You can choose to pay the money back at any time before this.
Contact the DWP loan repayment team on 0800 916 0567 and ask for a 'settlement letter'. This tells you the exact amount you need to pay off.
The DWP charges you interest on the SMI payments it makes to your lender.
The interest rate is currently 3.28%
What if you cannot pay off an SMI loan after a sale?
The SMI payments made to your lender and the interest charged are secured on your home.
When your home is sold, you must pay off your mortgage and other secured loans first.
If there is not enough money left over, you must pay what you can and the DWP will write off the rest.
What happens to an SMI loan if you die?
If you live with a partner or dependant children, they will not have to repay the loan when you die but they must pay it back if the property is sold.
If you do not live with a partner or dependant children, the loan and interest must be paid off by whoever inherits the property.
If there is not enough money left over to repay the full amount, the DWP will write off the remaining balance.
Last updated: 1 August 2023
