Introduction
Homeowners might be able to get help towards interest payments for both your mortgage and loans you have taken out for certain repairs and improvements to your home. This is called Support for Mortgage Interest (SMI). It is paid as a loan and you will need to repay 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. There is no guarantee that you will receive SMI – all rates stated are correct as of March 2021 but may be subject to change.
SMI cannot help you to pay:
- The amount you borrowed, only the interest on your mortgage
- Anything towards insurance policies you have
- Missed mortgage payments (arrears)
What you will receive
If you qualify for Support for Mortgage Interest, you can get help paying mortgage interest on up to £200,000 of your loan or mortgage.
- You can only receive up to £100,000 if either:
- You receive Pension Credit
- You started claiming another qualifying benefit before January 2009 and you were below State Pension age at the time
If you are already receiving Support for Mortgage Interest and move to Pension Credit within 12 weeks of stopping your other benefits, you’ll still get help with interest on up to £200,000. The interest rate used to calculate the amount of SMI you’ll receive is currently 2.61%.
What you will repay
You will need to repay the money you receive with interest added on 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. The current rate is 1.3%. You will have the option to pay the loan back earlier and you can make voluntary repayments. The minimum voluntary payment is £100 or the outstanding balance is less than £100.
How Support for Mortgage Interest is paid
SMI is normally paid direct to your lender, payments can start either:
From the date, you start getting Pension Credit
After you’ve received Universal Credit for 9 months in a row, as long as you’re not getting a certain income
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 getting one of the following qualifying benefits:
- Income support
- Income-based jobseeker’s allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Universal Credit
- Pension Credit
You can start receiving the loan:
- From the date, you start reviving Pension Credit
- After you’ve claimed Income Support, income-based JSA or income-based ESA for 39 weeks in a row
- After you have received Universal Credit for 9 months in a row, as long as you are not getting a certain income.
You cannot get SMI if you receive the following:
- Earnings from your job if you’re employed or self-employed
- A tax refund
- Statutory Sick Pay
- Statutory Maternity Pay
- Statutory Paternity Pay
- Statutory Adoption Pay
- Statutory Shared Parental Pay
To start getting SMI, you will need to stop receiving this income and then get Universal Credit for 9 months in a row. If your income is too high to get a qualifying benefit you might still be able to get SMI if you apply for one of the qualifying benefits but cannot get it due to having a high income. You will then be treated as getting the benefit you applied for. You will not be treated as receiving Universal Credit if you cannot get it because of a high income.
If you’ve missed mortgage payments
You can still apply for the loan, however, it will not help you pay for payments that you have missed.
Having problems with other debts
You might not receive the loan if you think you could either go bankrupt or if you make another arrangement to help pay your debts such as an individual voluntary arrangement. If your bankruptcy or other arrangement has ended then you can get apply for SMI straight away. If you are bankrupt or have an IVA, you will normally be advised not to apply as it will affect the amount of money you will get for the home if you need to sell it to pay your debts.
Owning the home with someone who is not part of your benefit claim
SMI may affect what happens to your home if one of you dies, this is because it could split the mortgage into a share for each owner. Your mortgage payments won’t change. But if one of you dies, the other owner might have to sell the home to give a share to someone who inherits it (like a relative) or to pay off debts for the person who’s died
If you want to buy a new home whilst on benefits
If you get Universal Credit, you can get SMI for a mortgage for a new home. If you or someone in your family gets JSA, ESA, Income Support or Pension Credit, you can get SMI for a new mortgage if you:
- need to move home so a boy and girl can have separate bedrooms – if they’re 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 can’t get more SMI than you could get for your old mortgage
- are getting Housing Benefit when you buy your new home – you can’t get more SMI than the amount of Housing Benefit you’re getting
- only get JSA, ESA or Income Support to help with housing costs – you can’t get more SMI than the amount of JSA, ESA or Income Support you’re getting
Receiving Universal Credit and working some months but not all months
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. An ‘assessment period’ is the period the DWP use to calculate your next Universal Credit payment. Each assessment period lasts a month. If you stop work while you’re getting Universal Credit, you can apply for SMI again. If your Universal Credit stops, your SMI payments will stop too. You can claim Universal Credit and SMI again when you earn less. If you make a new claim for Universal Credit, you’ll usually have to wait 9 months for your SMI payments to start.
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 you get the loan are more than £6,000 if you receive JSA, ESA, Income Support or Universal Credit or £10,000 if you get Pension Credit
How to apply
When you apply for a qualifying benefit, you’ll be asked extra questions about your housing costs to find out whether you are eligible for Support Mortgage Interest. You may also need to fill in a form asking for more detailed information. If you qualify for SMI, you will be offered a loan. If you already get a qualifying benefit please contact the office that pays your benefit to find out if you could get an SMI loan. If you get or have applied for Income Support, income-based JSA or income-related ESA, contact Jobcentre Plus on 0800 169 0310.
Check if someone else needs to agree to the loan
If you live with your partner, they’ll need to agree to the loan as well – even if they don’t own the home with you. This is because the DWP treat you as a couple for benefits. If you own the home with someone else like a friend or family member, they might need to agree to the loan if they live with you. They won’t need to agree if they live somewhere else. The DWP will tell you if someone else needs to agree to the loan. It’s usually a good idea for them to agree because it means you’re more likely to afford the mortgage interest payments.
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 originally turned down an SMI loan and have changed your mind
you want help with a new loan
the DWP haven’t sent you the form when they should have
The DWP will send you an application form if they think you might be able to get SMI.
If you get JSA, ESA, Income Support or Universal Credit, the DWP will usually send the application form 7 to 8 months after you claim. This is because most SMI payments start about 9 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 4 weeks. If you can get it, the DWP will call to check if you still want SMI and explain how it works. You can also ask them any questions you have. After the phone call, they’ll send you 2 more forms:
the loan agreement and a charge form – this confirms they can take the money to pay back the SMI loan when you sell your home
Disagreement with the DWP’s decision
You can ask the DWP to change their decision. You’ll need to ask for ‘mandatory reconsideration’ – this means the DWP will look at the decision again. You usually need to contact them within 1 month of the date of the decision.
Repaying your loan
You 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 is 0.9%. You’ll be told if this is going to change. You will not be asked to sell your home to repay your SMI loan. Once you sell your home, you’ll repay the SMI loan from the remainder of the funds after paying for your secured loans (including any outstanding mortgage).
If you do not have enough left to pay off all of the loan, you will have to pay it back when you can. You can repay the loan earlier and make voluntary payments. The minimum voluntary payment is £100 or the outstanding balance if it is less than £100. If this is a wish then contact DWP Loan Repayment on 0800 916 0567 to ask 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 in your settlement letter.
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