Support for mortgage interest (SMI) loans

Support for mortgage interest (SMI) is not a benefit.

It is a loan from the Department for Work and Pensions (DWP).

You do not have to make monthly repayments on the loan.

But you do have to pay it back with interest when your home is sold.

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

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.

What does an SMI loan help with?

An SMI loan gives you some money towards your monthly mortgage interest.

SMI payments:

• are unlikely to cover your full interest

• do not cover any capital repayments

The DWP pays your mortgage lender direct.

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 use a 'standard interest rate' to work out how much to pay your lender each month.

This is often lower than your actual mortgage interest rate.

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.

Waiting times for SMI payments

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 during this time. Your lender might delay repossession action if you show you can get SMI soon.

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

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.

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 do 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. They might have to sell the property to repay the loan.

The DWP writes off the remaining balance if there is not enough money after a sale to repay the full amount.

Get advice and discuss your options

A debt adviser can help if you are finding it hard to pay your mortgage.