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 2.09%. 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). 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. For all others who qualify, the payments start 39 weeks after you started claiming any of the benefits listed above.
For how long can you claim SMI?
For those claiming Jobseeker's Allowance support for mortgage interest will only be paid for up to two years. There is no time limit if you are receiving Income Support, Pension Credit, Universal Credit or Income-related Employment and Support Allowance.
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 1.4% 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.
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.