Support for mortgage interest

Introduction

Homeowners may be able to get help towards interest payments. This is called Support for Mortgage Interest (SMI). It is a loan that will need to be repaid with interest when you sell or transfer the ownership of your home. Usually, you will need to be getting a qualifying benefit to be eligible for SMI.

SMI cannot help you to pay:

• The amount you borrowed, only the interest on your mortgage;
• Anything towards insurance policies you have; or
• Missed mortgage payments (arrears).

 

What you will receive

If you qualify then you can receive help paying mortgage interest on up to £200,000 of your loan or mortgage, this drops to £100,000 if either you receive Pension Credit or you started claiming another qualifying benefit before January 2009 (and you were below State Pension age at the time).

 

What you will repay

You will need to repay the money you receive with interest added when you sell or transfer the ownership of your home. The interest added may go up or down, but the rate will not change more than twice per year.

 

How Support for Mortgage Interest is paid

SMI is normally paid directly to your lender and can start either:

• From the date you start getting Pension Credit;
• After you've received Universal Credit for nine months in a row, as long as you're not getting a certain income; or
• After you have claimed any other qualifying benefit for 39 weeks in a row.

 

Eligibility

To be eligible for the SMI loan, you usually need to be receiving one of the following qualifying benefits:

• Income support; 
• Income-based jobseeker's allowance (JSA);
• Income-related Employment and Support Allowance (ESA);
• Universal Credit; or
• Pension Credit.

You can generally start receiving the loan from the date, you start getting Pension Credit after you've claimed Income Support, income-based ESA / JSA for 39 weeks or after receiving Universal Credit for nine months.

You cannot get SMI if you receive the following:

• Earnings from your job if you're employed or self-employed;
• A tax refund; or
• Statutory Sick Pay, Maternity Pay, Paternity Pay, Shared Parental Pay or Adoption Pay.

If your income is too high to get a qualifying benefit, you might still be able to get SMI if you receive one of the qualifying benefits.

 

Having problems with other debts

You are unlikely to receive the loan if you initiate other avenues to help pay your debts such as declaring yourself bankrupt or entering into an individual voluntary arrangement. If, however, such an arrangement has ended then you can get apply for SMI straight away.

 

If you want to buy a new home whilst on benefits

If you or someone in your family gets JSA, ESA, Pension Credit or Income Support, you can get SMI for a new mortgage if you:

• Need to move home so children of opposite sexes can have separate bedrooms (provided they are at least 10 years old);
• Need to move to a home that's more suitable for a disability;
• Already have a mortgage for the home you're moving out of - you cannot get more SMI than you could get for your old mortgage;
• Are receiving housing benefits when you buy your new home; or
• Only get JSA, Income Support or ESA to help with housing costs (you can't get more SMI than the amount of JSA, ESA or Income Support you receive).

 

Receiving Universal Credit and intermittent working

You can only get SMI payments for months when you and your partner don't do any paid work. If you or your partner do some paid work, you won't get SMI for that “assessment period” (the period the DWP base your next Universal Credit (U.C) payment on). Each assessment period lasts a month. If you stop work while you are receiving U.C then you can apply for SMI again. If your U.C stops, your SMI payments will stop too. If you make a new claim for U.C, you'll usually have to wait 9 months for your SMI payments to restart.

 

Effect on credit score

There's no credit check for the SMI loan, and it won't affect your benefits or credit score. If you get a loan from somewhere else like a bank or a family member, it might affect your benefits if they give you all the money in one payment. This could happen if your savings after getting the loan are more than £6,000 if you receive JSA, ESA, Universal Credit or Income Support (or £10,000 if you get Pension Credit).

 

How to apply

When you apply for a qualifying benefit, you'll be asked additional questions about your housing costs to determine whether you are eligible for SMI.

 

Check if someone else needs to agree to the loan

If you live with your partner, they will need to agree to the loan as well, even if they don't own the home with you.

 

Ask for an application form

Contact the office you usually talk to about your benefits and ask them to send you an SMI application form. You should ask for a form if:

• You initially turned down an SMI loan and have changed your mind;
• You want to apply for help with a new loan; or
• The DWP have not sent you the form when they should have.

The DWP will send you an application form if they think you may be eligible.

If you get JSA, ESA, UC or Income Support, the DWP will usually send the application form seven to eight months after you claim. This is because most SMI payments start about nine months after your benefit starts. If you get Pension Credit, you should get an application form straight away.

 

After you have sent the form

The DWP will tell you if you can get SMI. Contact them if you haven't heard from them after four weeks. If you can get it, the DWP will call to check if you still want to apply for an SMI loan and explain how it works. You can also ask them any questions you have. After the phone call, they'll send you two additional forms: a loan agreement and a charge form. This confirms whether you will eventually be able to pay back the SMI loan once you sell your home.

 

Disagreement with the DWP's decision

You can file a “mandatory reconsideration” (MR) which asks the DWP to look at the decision again. You usually need to request one within one month of the date of the initial decision.

 

Repaying your loan

You will need to repay the loan if you sell or transfer ownership of your home. The interest you pay can go up or down, but the rate will not change more than twice a year. The current rate (as of Nov 2021) is 1.3%. You will be notified if this is going to change. Once you sell your home, you'll need to repay the SMI loan after paying for your secured loans (including any outstanding mortgage).

 

Voluntary Payments

The minimum voluntary amount is £100 (or the outstanding balance if it is under £100). If you wish to make voluntary payments you should contact the DWP for a 'settlement letter'. This will tell you how much you need to pay. You can pay by telephone or online banking using the bank account details provided.