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Deciding if you should apply for SMI

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Support for mortgage interest (SMI) is a loan from the Department of Work and Pensions (DWP) to help pay towards the interest on your mortgage or another home loan.

You might get SMI if you own your home or you’re in a shared ownership scheme.

You also need to be getting one of these benefits:

  • income-based Jobseeker’s Allowance (JSA)
  • income-related Employment and Support Allowance (ESA)
  • Income Support
  • Universal Credit
  • Pension Credit

The DWP will charge interest on the SMI loan - this means you’ll pay back more than you borrowed. Even though you’ll pay interest, it could be cheaper than other ways of borrowing money.

You’ll need to pay back the loan, but usually only when you sell your home or give it to someone else. For example, you might give the home to your son or daughter, even if you still live there.

You won’t have to pay back any money you get in your benefit payments to help with other housing costs like service charges.

Check if you can get SMI for your loan

SMI can help to pay the interest payments for a:

  • mortgage for the home you live in
  • loan to help you buy more of your home
  • loan to help with other costs like legal fees and stamp duty
  • loan to pay off your mortgage
  • alternative finance arrangement like an Islamic mortgage - if you get Universal Credit or Pension Credit

You might also get help with other loans for service charges or repairs.

SMI can only help pay your interest payments. It won't pay off the capital of your mortgage.

When your SMI payments will start

If you get JSA, ESA or Income Support, you can usually get SMI starting from 39 weeks (about 9 months) after you claimed JSA, ESA or Income Support.

If you get Universal Credit, you can usually get SMI starting from 9 months after you claimed Universal Credit.

The time before your SMI starts is called the ‘waiting period’.

If you’ll struggle to pay your mortgage until your SMI starts, check what help you can get with your other living costs or ask your nearest Citizens Advice if you can get an SMI loan earlier.

If you get Pension Credit, your SMI payments will start straight away.

Check if you need to get advice

There are some situations where you should get advice first - check if you need advice before you apply for SMI.

If you’ve missed mortgage payments

You can still apply for SMI, but it won’t help you pay back the payments you’ve missed.

It’s important to plan how you’ll pay back the missed payments - ask your nearest Citizens Advice to help you work out how to afford them.

If you’re having problems with other debts

You might not get an SMI loan if you think you could either:

  • go bankrupt
  • make another agreement to help pay your debts, like an individual voluntary arrangement (IVA)

Check if you can get SMI by calling the office you usually talk to about your benefits. You can find the contact details for your benefit on GOV.UK.

You can also ask your nearest Citizens Advice to help you contact them.

If you’ve already gone bankrupt or made a formal debt agreement

If your bankruptcy or other agreement has ended, you can apply for SMI straight away - you don't need to check with anyone.

If you’re still bankrupt or have an IVA, ask your trustee in bankruptcy or insolvency practitioner if you can apply for SMI. They'll usually tell you not to apply, because it affects how much money you’d get if you had to sell your home to pay your debts.

If you have another agreement like a debt management plan or administration order, call the office you usually talk to about your benefits. Ask them if you can get SMI - you can ask an adviser to help you.

If you own your home with someone who isn't part of your benefit claim

SMI might affect what happens to your home when one of you dies - this is because it could split your 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)
  • pay off debts for the person who’s died

Contact your nearest Citizens Advice before you apply for SMI.

If you want to buy a new home while you’re getting 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

If you get Universal Credit and work some months but not others

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 of time 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.

If you’ll struggle to pay your mortgage until your SMI payments start, check what help you can get with your other living costs.

Compare SMI with other options

You’ll need to decide whether you want to accept an SMI loan or find another way to pay your mortgage. It’s important to make sure you keep making the payments so you don’t lose your home.

Compare the different ways you could pay the mortgage, like getting a loan from somewhere else or changing your mortgage payments. For each option, find out:

  • how much money you’ll get
  • how much interest you’ll pay
  • when you’ll have to pay it back
  • if it will affect your benefits or credit score

If you’re thinking of borrowing money from friends or family, you should also think about what might happen if you can’t pay it back - for example if they might stop helping you with other things, like childcare.

You can ask your nearest Citizens Advice to help you understand your options. They can’t tell you which option you should choose. If you want someone to help you decide what to do, you can find a financial adviser - you’ll have to pay for their help.

How much SMI you can get

If you get JSA, ESA, Income Support or Universal Credit, the DWP will usually pay the interest on up to £200,000 of your mortgage.

If you get Pension Credit, the DWP will usually pay the interest on up to £100,000 of your mortgage. They’ll pay interest on up to £200,000 if your Pension Credit started within 12 weeks after you stopped getting JSA, ESA, Income Support or Universal Credit.

If you own the home with someone else, you might only get interest for your share of the mortgage. For example, if you have a mortgage of £200,000 with your ex-partner, the DWP might say your share of the mortgage is half the total amount - £100,000.

Once the DWP have worked out how much of your mortgage they can pay the interest on, they’ll pay it straight to your mortgage lender.

They pay 2.61% interest for everyone - it doesn’t matter how much your mortgage payments are.

The DWP might take some money off your payments if you get money from:

  • work
  • a mortgage protection policy
  • something else, like a lodger

If you get JSA, ESA, Income Support or Pension Credit, the DWP might also reduce your payments if you live with another adult who could pay you rent - for example a flatmate or a grown-up son or daughter.

If the loan doesn’t cover your mortgage payments, you’ll need to pay the extra money yourself. Check if you can cut down your mortgage costs if you can’t afford the payments.

Example

Laura has a mortgage of £100,000 and pays 3% interest.

It’s an interest-only mortgage, so she pays 3% interest each month. She doesn’t pay back any of the £100,000 - known as ‘capital’.

This means Laura’s monthly mortgage payment is 3% of £100,000 - £250.

The DWP pays 2.61% interest for Laura’s whole mortgage - £217.50.

Laura needs to pay the rest of her mortgage payment - £32.50.

How much interest you’ll pay

You’ll pay 1.7% interest on the SMI loan - the rate might go up or down.

Even though you’ll pay interest, it could be cheaper than other ways of borrowing money. For example, you might pay more interest if you get a loan from somewhere else like a bank or credit union - or if you change your mortgage payments. If a friend or family member gets a loan for you, they might pay more interest on their loan too.

You can find out more about comparing how much loans will cost before you decide what to do.

When you’ll have to pay it back

If you get a loan from somewhere else, you’ll usually need to pay it back sooner than an SMI loan.

You’ll usually only have to pay back the SMI loan when you sell your home or give it to someone else. The DWP will take the money for the loan after your mortgage has been paid. You can’t use the money for anything else until your mortgage and SMI loan have been paid.

You might need to pay the SMI loan back earlier if you go bankrupt or make another formal agreement to pay other debts you have - like an individual voluntary arrangement (IVA).

If your partner lives in your home and will inherit it when you die, they won’t have to pay the loan back straight away - it can be paid after they die. If anyone else inherits your home, they’ll have to pay back the SMI loan first.

If there isn’t enough money left to pay the SMI loan back after your mortgage has been paid, the DWP will cancel the rest of the debt. They’ll only ask for more money if:

  • they think you deliberately sold your home cheaply
  • you gave your home to someone else instead of selling it

If this happens, the DWP will work out how much money you’d have got from selling your house on the open market - for example through an estate agent. They’ll use that amount to decide how much SMI you could have paid back after you’d paid your mortgage.

You can pay back an SMI loan back early - but it’s important to check how paying it back will affect your other loans. You should also check how it will affect your benefits.

How it will affect your benefits or 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 get JSA, ESA, Income Support or Universal Credit
  • £10,000 - if you get Pension Credit

You can usually use your savings to pay your mortgage interest. Contact your nearest Citizens Advice if you’re thinking of using your savings to pay more than your usual monthly payments - this could affect your benefits.

If you decide to apply for SMI

You’ll need to fill in an SMI application form - find out how to apply for SMI.

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