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Mortgages & Protections | Support for Mortgage Interest (SMI)

Updated: Aug 7, 2023

The Corona Virus pandemic is extremely worrying on so many levels. Not just our own health and that of our loved ones, but also the potential impact on our financial situation; especially if the crisis persists beyond the summer.

If you’re a homeowner, you might be able to get help towards interest payments on:

· your mortgage

· loans you’ve taken out for certain repairs and improvements to your home

This help is called Support for Mortgage Interest (SMI).

It’s paid as a loan, which you’ll need to repay with interest when you sell or transfer ownership of your home. You usually need to be getting, or treated as getting, a qualifying benefit to get SMI.

To qualify

For a Support for Mortgage Interest (SMI) loan you usually need to be getting one of the following:

· Income Support

· income-based Jobseeker’s Allowance (JSA)

· income-related Employment and Support Allowance (ESA)

· Universal Credit

· Pension Credit

There’s no guarantee that you’ll get SMI for a mortgage or loan you take out.

What you cannot use SMI help you pay for:

· the amount you borrowed - only the interest on your mortgage

· anything towards insurance policies you have

· missed mortgage payments (arrears)

What you'll get

If you qualify for Support for Mortgage Interest (SMI), you’ll get help paying the interest on up to £200,000 of your loan or mortgage.

This figure is £100,000 if:

· you’re getting Pension Credit

· you started claiming another qualifying benefit before January 2009

If you’re already getting SMI 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 get is currently 2.61%.

What you’ll pay back

SMI is paid as a loan. You’ll need to repay the money you get with interest when you sell or transfer ownership of your home.

The interest added to the loan can go up or down, but the rate will not change more than twice a year. The current rate is 1.3%.

If you want to pay the loan back more quickly, you can also make voluntary repayments. The minimum voluntary repayment is £100 or the outstanding balance if it’s less than £100.

How SMI 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 had 9 consecutive Universal Credit payments

· after you’ve claimed any other qualifying benefit for 39 consecutive weeks

The information provided in this article is not intended to constitute legal or financial advice. You should take independent legal, accountancy or financial advice before relying on the information in this article or before decisions are made or before you embark on any course of action.

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