Support for Mortgage Interest (SMI) can help you make your mortgage payments if you are in receipt of certain benefits but there are caveats to who qualifies for SMI and how much it will pay. In this article, we explain how SMI works and how to qualify.
What is Support for Mortgage Interest (SMI)?
If you are a homeowner and get certain income-related benefits, you may qualify for help towards your mortgage interest payments in the form of a loan that is repayable.
Who qualifies for SMI?
You qualify if you are a homeowner and are in receipt of:
- Income Support
- Income-based Jobseekers Allowance
- Income-related Employment and Support Allowance
- Universal Credit
- Pension Credit
What is covered by SMI?
You only get help towards interest payments for mortgages and any payments are made directly to your lender. There is no payment towards the capital sum borrowed, any mortgage arrears or related insurance premiums.
How is SMI calculated?
The standard interest used to calculate SMI is currently 2.65%. The rate of interest you actually pay on your mortgage is not taken into account, if you currently pay a lower rate then you may be able to repay some capital. Conversely, if your actual rate is higher then you may find yourself with mortgage arrears.
How much of the mortgage is covered under SMI?
You may be able to claim interest on loans up to £200,000 (£100,000 if you are receiving pension credit or you started claiming another qualifying benefit before January 2009 and were below state pension age at the time). Even if your mortgage balance is higher than this amount, you cannot claim more than the amount of interest that would be payable up to these limits.
Is there a waiting period before you can claim SMI?
People over 60 who are claiming Pension Credit are entitled to help immediately. Universal Credit claimants can receive SMI after 3 continuous months of receiving this benefit. For all others who qualify, the payments start 39 weeks after you started claiming any of the other benefits listed above.
The waiting period is reduced in some instances where you have moved from receiving one type of benefit to another or where your benefits stopped and restarted within a certain period of time.
For how long can you claim SMI?
There is no time limit for how long you can claim SMI - you must meet the criteria to qualify for the support and as long as you do this, you can claim SMI.
Do I have to pay SMI back?
Yes, SMI is treated as a loan which you are expected to repay, along with the interest accrued on the loan, if you sell or transfer ownership of your home. The loan will accrue interest at a rate of 3.03% currently. Your SMI loan is only paid with monies left over after you have repaid the mortgage, other home improvement loans and any other secured loans against your home when you sell it. If there are insufficient funds left then you must pay what you can and the rest of the loan may be written off. However, if you are buying a new home then you can request that your loan is transferred over to your new property. You can make voluntary repayments to repay your loan sooner.
How do you claim for SMI?
You can claim SMI if it is deemed that you qualify during your benefit assessment. If you qualify for SMI, you will be offered this alongside the benefits that you have applied for and even if you do not take this support at first, you can go back and ask to start receiving it.
If you are in receipt of a qualifying benefit but have not claimed SMI before, you can apply through the Jobcentre Plus or Pension Service and your SMI payments can be backdated to when you would have first qualified for them.
You can make a claim for SMI at your local Jobcentre Plus, the Pension Service or Universal Credit depending on the type of benefit that you receive. You will find all the contact information in "Support for Mortgage Interest - How to apply".
You have to provide details of your mortgage costs together with details regarding your financial situation. Your lender will have to complete some forms confirming the details of your loan. Payments will be made every four weeks direct to your lender.
Further reading
Find out what benefits you are entitled to if any – in 6 mins
