Support for Mortgage Interest (SMI) helps some people with the cost of their mortgage if they aren’t working.
Since 2018 this help has been paid as a loan secured on your house, not a benefit, see the gov.uk page on SMI.
But this loan is cheap, you don’t have to make any repayments to it until the house is sold and it does not show on your credit record, so this is not as bad as it sounds.
How much help does SMI give?
If you lose your job, you can’t claim SMI for 13 weeks if you claim Universal Credit – this used to be 39 weeks but it was reduced in April 2023. If you retire and get Pension Credit, it is paid immediately.
The help SMI gives will probably be less than your monthly mortgage payments:
- SMI only helps with the interest you pay on your mortgage, not the capital repayments.
- There is a cap on the maximum amount of a mortgage you can get help with. This is £200,000 for working-age claimants and £100,000 for pensioners.
- The amount of SMI you are paid depends not on your mortgage rate but on the average interest rate for mortgages. In autumn 2024 this is 3.66%. If you are paying a higher interest rate, you will less help than the amount you are charged each month.
So SMI is not a very helpful benefit – too little and too late!
But if you can’t pay the mortgage, even a little help can be better than nothing. So you should seriously look at taking SMI, even though it is only a loan.
How the SMI loan works
How the loan is calculated
Each month the loan will increase by the amount that the government is paying to your mortgage provider.
There is no credit check for this SMI loan, so you won’t be refused even if you could not remortgage as you have a bad credit record.
The government adds interest to this loan. This is charged at the OBR’s forecast of the gilt rate – the rate the government can borrow money at. In autumn 2024 this was 3.9%.
Repaying the loan
You don’t have to make any repayments to this loan.
This applies even if your finances improve, for example if you return to work. At that point, SMI will stop, but you don’t have to make any payments to the loan you have already been given.
The SMI loan doesn’t appear on your credit record. As a result, not making any payments will not harm your credit score.
The loan will be repayable when your house is sold, transferred to someone else, or on death.
If there isn’t enough money to repay the loan, the rest will be written off. This loan cannot become a problem for you if you sell your house or for your your children after you die.
But if you want, you can repay the loan, or part of it, at any time, with a minimum repayment of £100.
To accept the SMI loan offer
The DWP is offering this loan to you. The legal terms for the loan arrangements are described in this document.
To accept the offer, you have to sign the loan agreement and a charge form. If the house is jointly owned and you live together, your partner also has to sign.
The charge will then be registered at the Land Registry.
Should you agree to take the loan?
A lot of people find the idea of getting a loan to pay their mortgage very worrying. “It’s not right to get new debt to pay off other debts” is a common comment.
As I debt adviser I would normally agree! But this SMI loan is very unusual because it is cheap and you don’t have to make any repayments to it. So you need to think about your situation and make a practical decision.
You may hate the idea. But this SMI loan is a good option for most people who can’t pay the mortgage for five reasons:
- it is much cheaper than borrowing elsewhere;
- you don’t have a job so you probably can’t remortgage;
- if you don’t take the loan and mortgage arrears will accumulate, your house may be repossessed;
- you don’t have to make any repayments to this loan, even if you start work;
- it can’t harm your credit record.
Do you have a better option?
Do you have savings you can use? Most people don’t have much or they wouldn’t be able to claim Universal Credit or Housing Benefit.
It’s also not a good idea to use all your savings to delay the point at which you need the loan – that will leave you with problems if any repairs are needed to your house or if you have an unexpectedly large bill, so make sure you keep a reasonable emergency fund.
Could relatives help you out? Don’t let them borrow money to help you – this SMI loan is massively cheaper than they could borrow at and they would have to make repayments, you don’t with the SMI loan.
Planning to cut back elsewhere, or sell things from your house, could turn out to be very stressful and difficult – you may end up with mortgage arrears.
If you are unsure, go to your local Citizens Advice. They can help you look at the details of this loan and at the rest of your situation:
- for some people there may be other benefits you could claim;
- there may be better options for handling any non-mortgage debts you have.
Mortgage problems? what are your options
Options when you cant pay bills & debts
Selling the house – a hard choice
Helen says
I am very worried received 2 letters today (Saturday) from SMI I spoke to them December asked for DWP to explain so called interest no call.
Now very worried how I am meant to pay mortgage interest they give yet my Lender charges 5.2%. I have no equity, letter said “ ask a friend or relative, if only had that benefit not many do” or downsize, I would not qualify for another mortgage and stress of selling be bad for my health
Panic worried not good for health as had hoped if I eventually reduce stress can rebuild my life
What do I do to get well avoid stress as clearly DWP benefits system as they call in makes me and I guess many others scared
Simple question hope gives me and others financial information needed desperately as looked on various websites nothing to help?
Please advise
PLEASE ALSO REALISE ILL AS MOST OF DWP CLAIMENTS ARE! WE DO NOT HAVE ENERGY NOR ABLE COPE WITH STRESS! WHY WE ARE ON DWP
Sara (Debt Camel) says
You don’t have to pay the interest on this SMI loan, it just gets added to the loan every month. So on an every day basis it will feel just like the benefit you are getting at the moment.
It’s not a good change, but there is no need to panic over it.
Helen says
The interest is added to your capital of loan, ie reduces equity if you have any
Long term not good as if eg £2000 loan over many years takes or creates a bigger debt
Yet those who rent fine yet rental expense DWP happy to pay
Stress we do not need I want to work with out financial worries,
Ob gvt don’t expect people help themselves & how important security is so
Brian swift says
My partner and I have worked and paid taxes all our working life ,I receive pension credit my partner of 35 years is registered disabled. We are both in our seventies. We would rather not accept a loan forced on to us .. We feel let down by this government! They will pay rents ,,welfare ,,etc to immagrants. My father fought for this country. .
Elderly people are being treated as unwanted citizens. We will not accept this loan and would sooner live on the streets . Thank you Mrs May ,a vote gone .
Deni says
Well said! There is an online petition about this although I fear it may have lost momentum. I also have a letter to my MP in the pipeline. Why not write to yours? This evil government is counting on the sick and elderly not making a fuss. Outrageous and unacceptable!
Sara (Debt Camel) says
I do understand that this feels unpleasant and as though you are being very poorly treated.
But please don’t let those emotions lead to you make a choice now that will make like your life harder. The loan is not expensive, you don’t have to make payments towards it. Unless you only get a very small amount of SMI, losing this help with your mortgage costs could mean you and your wife experiencing real hardship.
Poppy says
I hate the idea as well, but sadly the Tories will be only to happy to see you on the streets, after all we are the faceless brigade, so the only person you hurt will be you and your partner.
I had to attend the dreaded ESA medical the other day, I am 61 with borderline personality disorder (I doubt I will pass) I live alone with NO family at all, so I truly am alone and fighting my own battles to keep myself above water.
This is my house and has been for over 20 years, I have no intention of letting them win – yes they will take money from it when I sell it, but at least I kept a roof over my head in these most heartless of times.
As already stated above think very carefully, none of us like this – but sometimes we have to choose the lesser of two evils.
LharkStar says
Nobody with existing SMI benefit will be homeless or struggle because of this legislation. It will just mean that the loan will have to be paid back out of the equity, once you sell or pass away. So one could either downsize, or just stay put for life. And for those with low or negative equity, it’s really quite useful, isn’t it? None of the loan would ever have to be paid back in that case. It’s affecting me too and I’m not over the moon about it, as of course I would have loved to have the DWP continue to pay with me being the only one benefitting from my growing equity! But I can see why this benefit is seen to be somewhat unfair too. Yes renters will get their rent paid (up to a point), but they are still renters with not a great deal of security, most of whom will see escalating rents in future, and never be able to get on the houseladder. I think it’s much worse for new applicants, who have to wait for help from the DWP for as long as 9 months I think? AND they have all missed out on the out-of-control house price increases of recent years that have seen our equity rise exponentially.
Paul says
At last! someone who s read about it
Anthony says
Finding this site has made me a little more reassured, I have been dreading, to talk to anyone about this! I like quite a few others,( not woe is me at all!) on ESA with to me? & obviously diagnosed as depressed & very anxious, I worked & never been out of work from Sept 1968 to 2014, never ever out of work, &30 yrs with the same company! & suppose have to accept whats going on, I live on my own & no real family help other than “you need to be off that medication” & I never could be now off my “meds” Yeah the massive drug companies got me! So finding a site like this was a blessing! Just a question? maybe already answered, how much of a loan can we take towards our mortgage, please? DWP & I have no moans at all, have been reducing the amount paid to my lender over the last few months making me have to put more to the payments!? I have 120k interest only mortgage with 14 years to go? @ the age of 65? Is there any advice or comment you may have on my story p[lease! other than my grammar etc! not very well educated! But hey still above & breathin, just the old head not right nowadays?
Sara (Debt Camel) says
“how much of a loan can we take towards our mortgage, please? DWP have been reducing the amount paid to my lender over the last few months making me have to put more to the payments!?”
I am afraid that will continue. there are two reasons people’s SMI payments may have been reducing. The first is if they have a repayment mortgage, but that’s not relevant for you. The second SMI is because SMI only pays out at a government set interest rate which is daftly linked to the rate on new mortgages, not what you actually pay. As new mortgages rates have been falling, so has what SMI pays.
This isn’t going to change when SMI becomes a loan. you will get exactly the same each month as you currently do, but as a loan, not a benefit.
LharkStar says
Hi there,
I just wanted to add, that it is really worth speaking to Serco, who are managing the transitions from this benefit turning into a loan as of April 2018. They will clarify everything for you and answer your questions, and make it clear how this change will affect your circumstances personally. I assume you have received something in the post from them? I really recommend you phone them to go over your situation!
All the best.
Cathy says
Hello,I cannot work out how much interest I would pay back in 2years 4months. (when my mortgage ends.) if I accept SMI loan.
When I phoned Serco for help..I was told they couldn’t help !
Also my interest rate is only 1.5%
So don’t know what’s best thing to do,as there’s is 1.7%
LharkStar says
I find that when you call Serco it’s a bit pot luck. Either you get someone who is totally clued up, or you get someone who doesn’t have a clue! The answer would really depend on how much the DWP is contributing each month to your mortgage interest. I would try and phone them again tomorrow and ask for some sort of help with a projection. If no luck, then tell me what the amount is that they are paying your lender each month, and I could give you an idea. It wouldn’t be hard to work out as it’s only for 2 years and 4 months, which isn’t very long.
Craig says
I am a single dad with a severely desabled boy off the age off 6yrs who lives with me full time, I have worked hard all my life and managed to get my own home 2yrs ago. had to do the 9 months wait for help! It destroyed me but done it! Now this just Carnt believe it? I was supposed to be able to work 16hrs a weak? To top my money up and the women in the dole office said I’d be worse off!… If I was to walk away from my son and put him in care it would cost this government £5000 a weak! I Carnt believe the old and vulnerable people are getting treated like this! (Am out off my mind with anger and worry)..Iv got 23yrs left on my morgage and my son will have no cure why don’t I just hand the keys over now!
Sara (Debt Camel) says
“why don’t I just hand the keys over now!” because if you take the loan you and your son can stay in your house.
Who knows what will happen in the next 23 years. The benefits you and your son get may change. At some point you may be able to work part time. But right now, taking the loan will almost certainly be the best option for you.
I think it might be a good idea to go to your local Citizens Advice for a complete benefits check.
Alli says
Hi,
this is nothing more than government land grab.
They sold off all their council houses, rather stupidly , and now need more houses by which ever way they can.
Had PIPs assessement , assessor lied now losing my motability vehicle which I desperately need. Appeals to the tribunal are 23 weeks just in case you guys need to know this, even if I get it overturned won’t get my car back, it will be July by then.
Now are forced to either move, pay it off, or take a loan to,pay the interest on the mortgage loan , with interest.
I notice that they are not doing the same for private landlords who rent their houses to pay a mortgage
Totally sucks, hit the disabled once again, been hit twice …car and house , what next .
Have had enough .
J A Necchi says
Discrimination! Private landlords are not subjected to SMI loans despite some tenants claiming rent relief ie the Govt is financing interest only mortgages for those landlords. The point of the interest change was that houses increase in value
therefore should not be financed by the Govt. So why not private landlords subjected to same rule ?
Ross Skelton says
This is so frustrating. Instead of helping us to stay in our own homes, they will force repossessions that will be bought by the not so poor and rented back to us, then the dwp will pay the landlords mortgage (via our rent) and the shift of wealth continues. I have 10yrs left on my mortgage, currently receiving £80 a month help. I will most likely lose my home now and the dwp will end up housing me for the rest of my life (unlikely to get better with all this continual stress) costing a hell of a lot more than helping me…..?
Sara (Debt Camel) says
You are NOT going to lose your home now – unless you refuse to take out the loan and can’t afford your mortgage as a result.
John says
I have 13 years left on my interest only mortgage having two disabled children I am unlikely to ever be able to go back to work should I wait 13 years to upheave my family or do it now I cannot afford £828 a month to pay off the house
Sara (Debt Camel) says
That question involves a lot of issues that have nothing to do with SMI. Is the house suitable for you now? Will it continue to be? If it is “only” the SMI issue, then a lot can change in 13 years, I wouldn’t rush into a decision to sell. But if you have other reasons to want to move, that is different.
John says
The only issue I have is what happens in 13 years when the mortgage runs out the mortgage company will take there money and the government there’s leaving nothing for my family to try and restart
Sara (Debt Camel) says
What would you do if you sold now?
LharkStar says
A lot can happen in 13 years! And you’ll still have an ever-growing equity by then, minus the DWP interest loan.
Lee Perkins says
It’s an outrage, I worked all my life until becoming ill. How can they stop SMI payments but continue with rental relief payments to claiments and landlords who own rental properties??? I live hand to mouth as it is, I don’t have £15,999 as savings – yes I have a property but the capital doesn’t lower as a result of recieving SMI. This totally stinks, I can tell you now that people will die as a result of this policy, 100%. Why don’t they stop all our benefits and make us beg in the streets or get loans from Loan Sharks, I just cannot believe this is happening to me, any hope of turning my life around was stolen the minute they hammered the last nail in – SMI is stopping!!
LharkStar says
But SMI isn’t stopping, it’s carrying on as normal. Just comes out of the equity later if you sell or die.
P says
Some off the answers on here stink of government answers me and my wife worked for the last 30 years only to circumstances changing cancer I now look after my wife as a carer we have no money two kids a tiny bit of equity in our home and know they want that if all the stress wasn’t enough we have no future we should just go and live on the streets well done
Sara (Debt Camel) says
It’s up to you what you decide to do. I strongly dislike these SMI changes but I see my role here as making sure people are aware of how SMI as a loan will actually work so you make that decision based on good information.
LharkStar says
But if you have just a ‘tiny bit of equity’ then that’s surely quite a positive situation to be in with regard to this legislation, in that the loan would be completely written off at the end of the mortgage term despite not having enough equity to meet the debt to the DWP? I’m just trying to look at the whole thing as positively as possible, and I’m wondering if some people could possibly look at the whole situation more pragmatically as well? I fail to see how anyone could end up ‘living on the streets’ because of this change?
Suzanne says
Why always target the worse off?
How come they are paying full rents or almost full rents for people and they dont have to pay that back?
I get only £ 30 paid from dwp a month towards part not full of the interest on my morgage and have to pay the remaining capital out of my £73 per week.which does not meet the full amount as its short falling each month.In a rented property for eg they would pay £450 but those people pay nothing back.I used to say before how come they will pay that much for rented and nothing for morgages because they dont get the money back either way from either.TILL NOW OFF US!!!!
Still no clue how this loan works or how much it is they give you.where does the money sit in sercos account .plus if its a loan now they might as well pay the bloody full interest now and stop the morgage shortfalling if were paying it back with interest.but i doubt that will happen
Sara (Debt Camel) says
“Still no clue how this loan works or how much it is they give you.where does the money sit in sercos account”
You will get exactly the same amount of SMI as before.
It will be paid directly to the lender as before.
Only change is the SMI is now a loan to you, not a benefit.
The loan is from the government, not Serco. The loan and its interest do not feature in in Sercos accounts at all.
“plus if its a loan now they might as well pay the bloody full interest now and stop the morgage shortfalling if were paying it back with interest.but i doubt that will happen”
That would be good! But no, it’s not going to happen.
John says
I spoke to Serco yesterday all they seem to do is parrot the booklet then post you the forms if you want the loan. If you want to know how much you will get you need to speak to DWP but as far Serco are ‘aware’ it’s what you are currently getting which I think is 2.6%.
Sue Fletcher says
If you are getting ESA at the moment – does the SMI loan just carry on from April or do you have to wait for the 39 weeks to be able to access the “benefit”?
Sara (Debt Camel) says
If you are already getting SMI then there will be no break with switching to the SMI loan.
Sue Fletcher says
Thank you for confirming that. Most appreciated help.
dentom says
Simply put, after April 2018, SMI becomes a sharp sword as well as a diminishing shield.
Sara (Debt Camel) says
That is a misleading description.
Deniz Case says
I like that description. A truly horrendous move by an uncaring malevolent government.
Suzanne says
All that paperwork is hard to understand.needs a solicitor to look over it.no one wants to explain or answer questions at all.just expected to sign and post back.
Dwp dont want to chat about it.nor servo.tried contacting cab and cant get to speak to anyone.same with stepchange.then tried money advice same again clueless then my morgage provider.so where do you go to be fully explained what your signing your life and probably house away to if no one wants to know or clearly doesnt know.. No one goes to the bank to get a loan and just signs papers without knowing how much your paying back and all the legal stuff so why is no one explaining like serco or dwp ..hows everyone else coping with all this il never know
deni case says
I ignored their calls before Christmas as I didn’t trust myself to be pleasant to anyone I was speaking to. I still don’t. I also hoped the situation or my situation might change but nothing has. I have a letter to my MP but I don’t hold out much hope as he is being investigated himself for alleged election expense fraud1 Nice bunch, aren’t they?! I’m going to have to take up the loan as I just don’t have the income to pay the bank interest myself and I need the peace of mind but I intend (reluctantly) to sell my house as soon as possible after that as I’m determined to give this evil shower of a government the least I can. As I said earlier in another post, this is a truly malevolent move by an uncaring government, but then since when was any government ‘caring’ about the vulnerable/elderly?!
Sara (Debt Camel) says
You will make the government extremely happy if you sell and come off SMI – that is a great result for them. I’m not saying don’t do it, just that you need to think what is right for you, bother whether the government will like it or not.
P says
I completly agree with you this further down the road will be the new PPI not that it helps and yes if you had a small amount of equity in your house you havnt now I think they will have to start building and anyone who is of the opinion family’s won’t be living on the street is not in the real world LH a lot of people are on This because of absolute desperation and to sign a legal document that you do not fully understand because of other issues good luck everyone oh and when your mortgage comes to a end it should be a beautiful world all that money we will have have we learned nothing about banks government and and pension projection 26 Jan 2018
Lynn Wilson says
I have got the forms to sign, but need to get in touch with DWP with a few questions, in total yesterday i was on the phone three times for about thirty minutes without a response. I have also been to CAB, they have told me it is up to me if i take the loan or not
Sara (Debt Camel) says
“I have also been to CAB, they have told me it is up to me if i take the loan or not”
That is of course correct. but I hope they managed to clarify what your options were?
Gareth Morgan says
Can I try to bring a bit of obectivity to this discussion. Information and advice is hard to find about this; especially as I understand that Citizens Advice and AgeUK have both decided that the new loans fall into the area of regulated financial advice and so have instructed their advisers that they are not permitted to give advice about them.
The changes are unwelcome but they are not disastrous.
The governments view is that the previous scheme, where many people had all their interest paid, meant that at the end of a mortgage, when the property came to be sold, after capital had been repaid, most people had made a gain as the value had increased, often very substantially. There is a lot of truth in that. Why therefore should the taxpayer have paid the interest on a loan to acquire an asset that increased in value?
The new scheme has been designed in the belief that the amount to be repaid will be less than the increase in value of the property over the same period.
If that works, then the scheme may be justifiable. The system will have helped people to stay in their homes over the period of the loan but the taxpayer will have, at least, shared in the ‘profit’ from the new value.
Gareth Morgan says
The risk in the scheme is that the government get their forecasts wrong. If houses don’t increase in value, as much as forecast, then people may lose some or all of their existing equity in the property. That is anybody’s guess at the moment although I think, with no evidence, that their forecasts of house price inflation are optimistic.
There is no reason for people to panic; in April things will continue as they currently operate. The loan is cheap and in the short term very affordable.
My main immediate concern is for those people who only qualify for benefit because of their mortgage interest. When that stops then they will lose their entitlement to benefit. They will still qualify for a loan, though they will lose any pasported entitlement to other benefits and services. For those people currently on benefit then it is likely that they will told about their loan qualification but I think that people claiming benefits for the first time will be very unlikely to get the necessary advice to know about this.
LharkStar says
So do I understand your last paragraph to mean… that there are some people who are receiving SMI on its own, without it being attached to ESA, JSA, or whatever income support they are (or, rather, are ‘not) receiving? So whereas SMI started out as a ‘benefit’ which had other benefits attached to it, like Council Tax benefit, et al, as it is now a loan new applicants will no longer receive those ‘other benefits’ in addition to their SMI loan? Or are you saying that perhaps people claiming for the first time could end up not being informed of the fact that they qualify for an SMI loan?
Gareth Morgan says
Benefits are based on need being more than resources. At the moment ‘need’ includes mortgage interest. After April it won’t, so, for example.
Needs – £100 + £50 mortgage interest
Resources £120
Benefit = £30
Post April
Needs £100
Resources £120
Benefit = 0
No benefit entitlement – hence no passported entitlement to other services or benefits – but there would still be a right to get a loan of £30
LharkStar says
Oh I see, thanks. So you reckon that new claimants for assistance might not be made aware that they can take out a loan for their unaffordable SMI interest?
Gareth Morgan says
I think it very likely that most advice will just stop at ‘no entitlement to benefit’.
poppy says
I was resigned to the changes, after all who knows what tomorrow brings let alone x amount of time down the years. Sure it would be better if SMI was staying as it was, but as a single person with no help and not looking to move at the moment it seemed the lesser of two evils (ie being out on the street)
Things have changed for me I lost my ESA medical so all payments have been stopped, I have no help with my mortgage at the moment, I am appealing the decision, but believe me how I wish for things to go back as they where.
I am looking for help over my mortgage payments but it seems no one knows about ESA and mortgage payments, the help boards are all clued up on renters/landlords, which shows how few people either care or know about us house owners.
Sure get mad, but remember there are worse things, like having no money coming in simply because some medical examiner spent 20 mins with you and saw you fit for work, despite what your GP and CPN say.
Harry says
Gareth, Between 26th Nov at 9:32pm and 1st Dec 8:14am I posted concerns about loss of passported benefits. I thought I’d understood this new loan but your recent posts have rekindled my anxieties. I liken your “needs: resources” to the computer-generated benefits notifications that DWP send; my friend’s details are Applicable Amount £221.80 + “an amount for housing costs” £15.96 (Which I presume is what you call “SMI”?) Total Income £236.35. I’m worried that without “an amount for housing costs” there’ll be no entitlement to Pension Credit guarantee as income will be too great; then no passported benefits.
My friends undecided about the loan; DWP have just sent the uplifted benefits rates for April 2018 and included “an amount for housing costs”. Why is this shown?
Am I correct; if the loan is accepted my friend’s benefit calculation/ moneys received will not change? AND If the loan is refused my friend pays the lender the full monthly payments and the PC guarantee / passported benefits will stop?
It’s interest only mortgage and no way to repay the capital when it ends in 2 years. It’s hoped it will become a repayment mortgage and that it will still be eligible for the “amount for housing costs”. Again, I seek I advise, am I correct in this presumption please?
PS. What’s worrying is that I am that “friend” the DWP has suggested a claimant asks for help!
Cathy says
I have a repayment mortgage that ends August 2020.If I accept the loan from Serco (assuming there interest rate stayed at the 1.70% that they have quoted.) I would like to know in advance how much I would owe them when my mortgage ends,but they were not able to tell me.
Dwp are paying £11.01 per.week toward my interest at the moment.
Can you answer this question for me and how you arrive at it.Thanks.
Sara (Debt Camel) says
This isn’t an easy question to answer because your SMI amounts will fall to nothing over the next three years as the interest you are paying on your mortgage reduces. Plus your mortgage rate may change and the SMI interest rate may change.
FWIW I would expect it to be under £1000 if interest rates don’t change.
Gareth Morgan says
Although the capital amount owing will change as payments are made on a repayment mortgage, I am told by DWP that they do not intend to reassess amounts each time this happens. They will adjust the capital amount outstanding, on which the SMI/loan is based, annually on the anniversary of claim.
In this example, and calculating it as if there will be no change in the amount outstanding, or in interest or loan rates, then my figures are.
Mortgage amount – £21,935, Loan repayment from April 2018 to September 2020
Total repayment £1,413.34 of which interest is £29.75. It won’t be that much as there will be two reductions in capital outstanding but, without knowing dates of claim, I can’t assess that.
On the basis of that current SMI amount then you should be reducing the capital by £756 a month, so after 12 months the loan amount should drop to £6.45 a week. That will make the final figure substantially lower.
Anna says
Hi.
Please could you advise me what would happen if I wanted to move once SMI becomes a loan?
My interest only mortgage is portable. If I sold my house would I then have to pay whatever I owed on the loan and then reapply when I moved? Or would the loan just continue on a new house along with my portable mortgage?
Thank you.
Deni says
I would also be interested to know the answer to this!
Sara (Debt Camel) says
I understand from the DWP that if you move, the SMI loan will be repaid from the sale. A new SMI loan will then be started in your new house.
Claire says
Does anyone know, for example if I claim for one year and my circumstances change, The loan would be cancelled but will interest continue for however many years until I sell my home on what I owe to that point?
Also what seems a bit off to me is that this payment is being paid to cover mortgage interest, to further charge interest is ‘interest on interest’.
Sara (Debt Camel) says
If you are no longer claiming SMI, interest will continue to be added to your SMI loan. You could start paying it off to reduce this, but for most people the SMI interest will be lower than the interest on their mortgage, so you would get a better improvement by overpaying your mortgage not clearing the SMI loan.
Yes it’s interest on interest. But there is nothing particularly wrong with that. Think of it as you not having to pay the mortgage interest but it rolls up.
Andrew Mclay says
Having read almost all of these posts i havn,t seen an answer to the main question “WHY” why are the government no longer going to pay the benefit.At present my benefit towards the interest is £86 a month but one of my neighbors is renting an exact same property and getting £450 a month rent paid by the government.It seems to me that people like like us on this post are been used as a the governments piggy bank in order to claw some of my neighbors rent money back at a later date.
Gareth Morgan says
As I said above “The governments view is that the previous scheme, where many people had all their interest paid, meant that at the end of a mortgage, when the property came to be sold, after capital had been repaid, most people had made a gain as the value had increased, often very substantially. There is a lot of truth in that. Why therefore should the taxpayer have paid the interest on a loan to acquire an asset that increased in value?
The new scheme has been designed in the belief that the amount to be repaid will be less than the increase in value of the property over the same period.”
Suzanne says
All interest paid? They never paid all the interest to begin with.They pay part interest you pay the capital.They pay more in rents to keep a landlord to keep his property.why not get the people in rented to pay back to.How someone above got £86 pounds il never know.I got £30 a month and short falled as i didnt have enough to pay out my jsa or esa.
Gareth Morgan says
It depends on the interest rate actually being charged on the mortgage. I had clients in the past who got more paid in SMI than they paid in interest.
John says
I have deep concerns, interest only mortgages like the one I was sold mean at the end of the Morgage I have to sell the house. This silly believe that people on benefits will make a killing when there morgage ends is ridiculous. 13 years from now I will be at the council offices with my 2 disabled kids and not a pot to pee in.
LharkStar says
But I think landlords pay capital gains tax on any profit they make on the properties they own when they sell them on, and I believe they also pay income tax on the rents they receive. So the government gets their money from them too. And renters aren’t in a position to pay the money back because they do not have equity that is gradually building on the value of the property they live in, like home owners do. Any money a homeowner has to pay back through an SMI loan just comes out of the equity that has grown during the length of their mortgages. If there is not enough equity in the property once it is either sold or the owner passes away, the remaining debt from the loan is simply written off.
Andrew Mclay says
Check out this SMI loan chart based on the interest rate been 2.2% and paying £20 a week.Not too far of what my current payments are at present.My mortgage ends in 7 years time,needed smelling salts to bring me round when i looked at the chart.
Sara (Debt Camel) says
Is your mortgage repayment or Interest only? the interest rate will not be 2.2%, it will be 1.7%.
Gareth Morgan says
The lower loan rate makes very little difference I’m afraid, even if it stays at that rate. My figures for 2.2% would be £7,877 after 7 years and for 1.7% it would be £7,736.
LharkStar says
I was also curious about this scenario that was questioned earlier, even though it doesn’t apply to me personally:
“My interest only mortgage is portable. If I sold my house would I then have to pay whatever I owed on the loan and then reapply when I moved? Or would the loan just continue on a new house along with my portable mortgage?”
My ‘guess’ would be, that the loan would have to be settled at the time of moving to a new property, despite the mortgage being ‘portable’, as the property that the loan is secured upon is changing, and then a new SMI loan would have to begin (if the person was still entitled to it). Not sure if there would have to be a new application made, and whether or not the person would have to endure a waiting period. I imagine that it would be expected that at this point of changing properties there would be enough equity at that stage to pay off the first loan. If not it would be written off.
If no one here knows the answer, I would suggest speaking to the department at the DWP that deals with SMI, and if they ‘weren’t sure’ then I would insist that it was down to them to provide a definitive answer. Serco is nothing more than another DWP ‘department’ that has been temporarily created to deal with this transition, but I found that their knowledge is rather limited, and that questions such as this seem ‘beyond their remit’.
Sara (Debt Camel) says
I will just make the practical observation that many so-called “portable” mortgages aren’t that easy to port if you aren’t employed…
LharkStar says
Good point – I reckon you’re right about that, as I wouldn’t have thought that one would have been able to get a mortgage in the first place if they were unemployed.
LharkStar says
I just wanted to clarify something… I am in the process of agreeing to this loan… I’m on ESA and have been for some time due to disability. During the course of this loan, which would last me until the end of my mortgage which is ten years from now, I will reach the age of 66, thereby becoming a pensioner. I am assuming that if I am still on ESA at that point, which seems likely, I would then move from ESA to pension benefit. I would still be on an ‘income-based benefit’, so I assume my loan would just continue to run normally until the end of the mortgage term?
Sara (Debt Camel) says
That will depend on what your income is as a pensioner and what “pensioner benefits” you are eligible for. It’s not possible to predict if pensioner benefits and eligibility for SMI may be changed in the next 10 years but your assumption “I would still be on an ‘income-based benefit’, so I assume my loan would just continue to run normally until the end of the mortgage term?” seems reasonable.
is your mortgage repayment or interest only?
LharkStar says
My mortgage is interest only, and will be remaining that way I expect. My income at pension age will be simply my state pension, and a little bit of state pension from the US from years ago. At the end of my mortgage term I would pay off the mortgage and my SMI loan out of the equity, and then the plan is to downsize with what’s left, at which point I would own something modest outright, and live on state pension(s).
Gareth Morgan says
Moneybox on BBC Radio 4 is covering SMI loans tomorrow (Feb 10th) at midday
Sara (Debt Camel) says
Link to the program if you missed it – Gareth was one of the people interviewed: http://www.bbc.co.uk/programmes/b09r3245
LharkStar says
Just listened to the R4 programme that you recommended. I didn’t realise that you personally would actually be participating in it, with a very level and pragmatic contribution as well! I’m sure it was very clear and useful for all that were listening. The most surprising information for me was that out of over 100,000 people currently receiving SMI benefit, only 6,000 have agreed to the loan to date! It makes me wonder about the remaining vast majority, i.e. how many of those people are somehow simply still unaware of this imminent transition, how many are just finding it impossible to come to grips with, how many are perhaps just ‘burying their heads in the sand’ out of fear or anger, and how many have simply come to other arrangements to pay their mortgage interest. Although I imagine the DWP will still be receiving a flood of signed agreements yet, just before the deadline.
LharkStar says
Also I agree that there has been a considerable lack of information and advice available on the subject, as Serco’s remit has seemed to be little more than a clerical one, just repeating everything one would have already (hopefully) read in the letters and accompanying ‘handbook’ received in the post. The DWP department dealing with SMI seems to know even less, as they just tell you to “phone Serco”! And as you rightfully mentioned, debt charities have been unable to give any advice at all, and just tell you to “speak to a financial consultant”, who will most likely not be up to scratch with such recent legislation anyway. The only way I have found to get to the bottom of things has been to dig around myself, and in that regard I have found this forum to be the best source of information that there is out there. Thanks to everyone here that has offered such important assistance.
deni case says
Personally I am finding it very hard to come to terms with as I find the whole thing completely outrageous. I wrote to my MP and received a reply just setting out what it is and the usual regurgitated stuff I already know from this site. I wasn’t expecting anything else especially as he is shortly going on trial for alleged election expenses fraud so I doubt his constituents’ concerns are uppermost in his agenda! However, I felt the need to make my views heard. One MP from the north did see his way to writing about it in the local press up there but apart from that, silence on the part of those who could do something potentially, especially the media. I will probably be one of the final avalanche as I can’t afford not to take up the government’s kind offer, but I am incensed by the move, not only on my behalf but those whose plight is clearly even worse than mine, as I see it anyway. I don’t see a bright economic future from what I see on various platforms and things can only get worse for the vulnerable of society. In the end, whether I move, which I will have to, or whether I don’t, either way the government wins.
F. F. says
Hi. I would like to know “who” decided that the previous policy must be cancelled and this horrible new SMI policy must be appiled?
Did the members pf parliament talked about that, and if they did when was it? And did the invite the people attend the discussions and debates? Did they ask people at all if they were / are happy with this new policy.
It seems to me that they only want to withdrew all the good policies that people in 1948 made of creating and reproducing a safe and healthy society. Now new generations don’t know about those steps taken then, or have forgotten, and the new conservative government is withdrawing all these advantages from the people. these is exactly what they are doing with our NHS as well.
Sara (Debt Camel) says
The policy change was announced in the Summer budget 2015. It was enacted as part of the Welfare Reform and Work Act 2016 which was debated/approved by Parliament.
asmi says
Been having sleepless nights since receiving letters about this SMI loan, loan on top of a loan!!!!! it is so unfair when one has worked and paid taxes and got into unfortunate situations to pay the mortgage is being basically picked on by this thieving government. what about the renters? will they be told to pay back in some form?? not spoken with Serco yet but I am so certain that they will only read you back what is in the massive 60 pages document that you will get if you sign up for this loan. Does anyone know if one can cancel this anytime they want?
LharkStar says
I think the logic is that renters do not have to pay back the help they receive because they are not later seeing a profit on their contributions like homeowners are in the form of building equity. Renters will always be starting from scratch again when they move on, whereas homeowners will generally see their equity increasing because of rising house costs. I personally am not ecstatic about the changes because it decreases my building equity, but I can understand why taxpayers do not want to fund our investments, many of which are renting themselves and have little hope of ever owning their own homes. I still feel fortunate for having escaped the renting population. And you can cancel the loan agreement at any time, but at that point you would either have to settle the debt or it would continue to build with interest until it was settled.
nabila says
hey
had a quick read through but still not any clearer on wat to do
am a single mom of 3 and receive esa, mortgages is jointly owned wit my ex husband whos done one but hav a very small equity
so as im the one claiming i will hav nothing and ex husband will still hav his share
its also interest only jus dont see wat is the safest choice
jus thinkin the house was never mine to begin wit
Sara (Debt Camel) says
how long until your interest-only mortgage ends?
Tracey Kesterton says
I was going to take up the offer of SMI until they realised I live with my partner who “works full time”. He is, actually self employed, and earns so little he can’t contribute to the household at all as his business is in the early stages.
But I was told I don’t qualify for SMI, and I can’t afford to pay my interest-only mortgage myself; I’m keeping 2 of us on one benefit cheque as it is!!
The lady from benefits office said she’d send me a form to assess us as “separated” and will require a home visit which sounds even more terrifying – what are they looking for??! Slightly scared and April looms…
Gareth Morgan says
That isn’t an SMI problem, it’s a benefits one; and potentially serious. If you have been living with your partner without the DWP knowing then they may assess you as having been overpaid. It may be even more serious if you’re living in a Universal Credit area. You should seek advice about this immediately from a CAB or other advice service.
Katie Cooper says
If I use the last of my saving covering the SMI rather then take the loan. And I don’t find employment before my saving run out will I have to wait 40 weeks to re-qualify for the loan?
Sara (Debt Camel) says
[edited as this has now been clarified by the DWP]
No, you would still be eligible for SMI so could claim immediately and indeed could ask for it to be backdated to April.
BUT If you expect to get work, it would be better to take the loan now and then repay it from your savings when you are working again. Or, probably better, keep your savings in case you need them to get through the 39 week period if the next job goes wrong.
Swill says
Leaving you with no option to HELP YOURSELF-The government did not amend any changes to THRESHOLD ON EARNINGS before benefits are affected by the change of SMI Loan. The earning threshold should have also be INCREASED so people have the option to help themselves.
I rang DWP to enquire if I was to rent the spare room to cover the housing cost myself, will it affect my benefits?
I was informed that only the first £20 is disregarded and the rest is taken off your income support, leaving you with no option to HELP YOURSELF but to accept the loan. I do not want to ask a family to help like the government suggested in the leaflet, I rather have the option to help my self which is obviously not included in the other options by the government.
davo says
what gets me about this serco loan is you have to sign a voluntary charging order to be placed on your home and be rubber stamped with the land registry before they give you a penny so it seems in many cases they will have this charging order hanging over folk for the sake of very little monthly interest payments from the word go which dont seem fair to me surely a better/fairer way would be let the payments amount to say £1000 and then get the homeowners to sign a voluntary charging order and if they wont then apply to the courts and slap them charges on top also
Sara (Debt Camel) says
The loan is being described as a secured loan, so the charging order needs to be in place from the start.
davo says
yeah but in some cases you could sign a voluntary charging order when your claiming benefits/eligible for the loan today then if your circumstances change for example you start work shortly after signing the voluntary charging order there will be a charging order in place for only a few pounds and im betting it wont be as easy getting the charging order removed as it was putting it in place when the few pounds have been repaid
Sara (Debt Camel) says
It’s simpler to get the charge set up at the start. This isn’t a voluntary charge offered on an unsecured loan, the loan you are being offered is secured and needs a charge.
davo says
so how hard is it to get a charging order removed once the debt has been cleared?because my understanding is it can be a nightmare especially if the process involves co-operation from a company like serco
Sara (Debt Camel) says
I would not expect this to be difficult with these SMI loans. Serco is not the creditor, the government is.
shafilia says
you dont sound that confident
Sara (Debt Camel) says
I said I don’t expect this to be a problem, what else can I say? There is no past experience for me to quote and my crystal ball isn’t working well but this isn’t an issue that I think people will have problems with.
People have got a real choice here – if you don’t take the SMI loan you need an alternative plan for avoiding mortgage arrears. Worrying about whether it will be a fuss in the future to get the charge removed if you repay the loan should be incredibly low on most people’s list of things to think about.
LharkStar says
Nor can I imagine why it would ever be a problem to get the charge removed. It’s a charge on your property securing a debt, just like any charge, including your mortgage. Once you settle the debt the creditor is legally required to remove the charge, I can’t see how they could ever have any choice in the matter.
davo says
because your relying on the co-operation of the dwp/the government to do the paperwork their end
Sara (Debt Camel) says
Which they will. This is a pointless thing to worry people about. It won’t be more than a minor inconvenience at worst. I’m going to delete any other comments about this.
Jane says
Hi.
In response to the comment above are charges on a property put on in a order? I was just wondering as to max out the mortgage one will have to be quick before Serco get their charge on it in April?
Sara (Debt Camel) says
Yes, charges are satisfied in order.
BUT no one in receipt of SMI would have any option to “max out the mortgage” – this is irrelevant to the decision people are facing about whether to agree to the new loan or what else to do to prevent mortgage arrears building up.
Jane says
Thank you for the information. The comment got me thinking, not because I wanted to max out my mortgage but because I recently made an enquiry about equity release and was told by the company that to do this one has to pay off the existing mortgage (if there is one) from the proceeds of the equity released as the company wants to be the first charge on the mortgage.
If anyone wanted to release equity in the future the mortgage and now the Serco loan would have to be paid off so if anyone was relying on that option for any reason it could quite possibly no longer be a viable one.
Sara (Debt Camel) says
Yes, the SMI loan would have to be repaid as a part of equity release. The SMI loan is reducing the amount of equity you will have and that makes future mortgage options, including equity release, harder. But this may only be a bit harder – the SMI loan for most people won’t get large quickly, so it will not have a large effect on the amount of equity you have.
If equity release is an option for you now, this is something you could look at as an alternative to this SMI loan. If you have an interest-only mortgage tackling the problem of what to do when that ends is important and equity release may help there. See https://www.moneyadviceservice.org.uk/en/articles/equity-release
Jane says
Hello.
I had my talk with the Serco advisor today and was told the interest rate at the moment is 1.5% on this loan which seems to be different to what others have been told but maybe 0.2% isn’t going to make much difference in the scheme of things.
Gareth Morgan says
It’s gone down because 1.5% was the OBR gilt forecast in November. The rate changes according to their forecast.
OBR issue forecasts twice a year in April and November. The regulations say that the rate follows the most recent forecast for the year.
Stanley says
Good Morning. I was just wondering if it would be legal for me (59 years of age), to sell my flat to a relative for £10.00 and for him/her to charge me £450 monthly rent hypothetically, which I would then a make a claim from the DWP or the Housing Benefit group to cover.
Sara (Debt Camel) says
That plan isn’t going to work. If you sell your flat for £10 that would stop you being able to claim any means-tested benefits including housing benefit. Also your mortgage lender would have to agree to the sale and that’s highly unlikely.
Gareth Morgan says
There are also a set of stringent regulations about claiming benefit towards rent for a house that you previously owned.
Sara (Debt Camel) says
Indeed. And there can be issues about deprivation of assets if there are ever care home costs, stamp duty, inheritance tax, capital gains tax, bankruptcy, divorce etc You could write a book on all the reasons why this a very bad idea.
Sid says
Hello.
With regards to this, before any other considerations, would you not have to pay off the existing mortgage when you sell it?
Sara (Debt Camel) says
Yes unless your mortgage company says you don’t have to, which (as I said above) is highly unlikely.
Neil says
Has anyone got the number to contact SERCO directly I’ve rang b4 but still have a couple more questions.
I’ve rang D.W.P but was on hold for over an hour so I tried MONEY ADVICE SERVICE and due to the weather their not open.
Cathy says
I think the number for Serco is 0800 046 8333
Neil says
Brilliant, Thankyou.
Cathy says
I think the phone no. For Serco is 0800 046 8333
Hilary Carter says
Although the Court ordered the house to be put into my name after a horrid divorce, Nationwide refused as my ex was working and I wasnt. I have now had a letter from my ex asking for his name to be taken off the mortgage – I understand it will cost me about £500 to get a solicitor to do this but I cant guarantee that the Nationwide will accept this – Will my ex be liable for mortgage payments?
Sara (Debt Camel) says
You have commented to on an article about SMI – are you currently getting that? It makes a big difference to your situation.
Claire Heywood says
If my name is on the mortgage as well as my daughters and her partner and the existing benefit is in her name, when we all have to sign the loan agreement, how liable may I be to repay any of the loan, if there is no profit made from the sale of the house ? I do not live with them at present.
Sara (Debt Camel) says
If there isn’t enough equity to repay the SMI loan when the house is sold it is written off – you won’t have to pay this and neither will your daughter and her partner.
Gareth Morgan says
If you don’t live in the house you won’t have to sign the loan agreement.
James says
Hi. What about if there is equity in the house? When the loan has to be repaid will the amount just be taken out of the daughters share if she is the one claiming benefits or would they be able to draw from someone else’s share too? Thank you.
swill says
Ii states -Under the T&C 13.1 Covenants and undertakings; You agree that from the date of this loan agreement until SMi loan is paid in full:
(c) you will not do grant any tenancy or other leasehold interest to any person over the property or any part of it;
My question is that if in few months time you get a job and wanted to get a lodger to help you manage the mortgage without relying on the smi loan -you can do it WITHOUT PAYING SMI LOAN IN FULL FIRST?
Sara (Debt Camel) says
I am not a housing lawyer, but legally a lodger is an “excluded occupier” not a tenant. So this clause probably won’t apply.
swill says
Thanks, it seems like ‘ help your own self ‘ is a limited option.
Andrew Mclay says
So in a nut shell as an home owner and i agree to this loan, i pay it back at some point in the future? However if i was a landlord of my property and someone else was living in my property in the same circumstances as myself the government would pay the rent. ie pay the mortgage for me.Then when the mortgage is paid after years of renting i can sell up with no loan to pay and live happily ever after.
LharkStar says
But you would have the Capital Gains Tax to pay when you sold the property as it wasn’t your home? It would seem the government ultimately manages to appropriate a reasonable chunk of any equity whichever position you’re in.
steven says
Due to long term ill health I am reviewing my financial arrangements. I receive Support for Mortgage Interest. Here is where I got to with Habito an online Mortgage broker. (text from screen chat below)
—————————————-
Me
“I was looking to remortgage for a better product. I receive Support for Mortgage Interest.”
Habito
“I’m afraid that isnt something any of our lenders will consider. Your best bet will be to talk to your current mortgage provider and
ask what new rates they have for you.”
——————————————
It is a similar story from other brokers. It seems clear to me that removing SMI from my benefit exposes me to a closed and noncompetitive
market. My mortgage provider has no obligation or incentive to change their mortgage product. I will therefore be stuck with a mortgage
provider who can raise my interest payments with impunity and change repayment conditions as they wish. If I choose not to adopt the new government loan, this will inevitability lead to a greater amount of interest than I would otherwise have to repay, I have 2 questions which the Serco rep was unable to help me with.
(1) What is Government doing to safeguard me from non competitive arrangements?
(2) Should I take the Govt Loan and choose to move property will Government still help me and must I downsize?
Kind regards
Steven.
Sara (Debt Camel) says
I don’t think this is anything to do with the SMI change. I assume you are on ESA? If that is the case it’s pretty unlikely that you would pass a new mortgage lender’s affordability tests :( There are a large number of “mortgage prisoners” in Britain who cannot get a mortgage elsewhere and they would normally include people on SMI.
If your current lender refuses to offer anything other than remaining on their standard variable rate, read https://debtcamel.co.uk/refused-a-mortgage/ and see if you have a reason to complain.
“Should I take the Govt Loan and choose to move property will Government still help me and must I downsize?” Is your current mortgage portable? If it isn’t you are likely to find it hard to get a new mortgage with a new lender.
LharkStar says
Just thought I’d add, I’ve been receiving SMI for some time, and whilst it’s impossible to change lenders or take out a new mortgage, I recently was able to switch to a very low interest fixed rate for 3 years. It pretty much halved my monthly payments. They didn’t care about the fact that I was in receipt of SMI, all they were interested in was that I hadn’t gone into arrears with them for the last 12 (or maybe it was 24, can’t remember) months. I think it’s still worth discussing this with your lender, you maybe surprised with what they can do if there are no arrears and haven’t been any for a year or two.
Anna says
Hi.
I asked a question about portable mortgages a while ago and have since found out from my lender, (Halifax) that if I were to move house, the mortgage itself is not portable. Apparently the only ‘portable’ thing is the interest rate. I would still have had to pass affordability and eligibility checks which I would not have passed being on ESA and SMI benefit. Therefore, I cannot move. But I was allowed to apply for a different product with no cost to me and have managed to go from a variable rate of 3.79% to 1.69% saving over £200 per month.
So it’s worth asking to change.
RMD777 says
Is it possible or perhaps in the pipeline that the loan monthly amount could be increased? DWP are currently processing me from DLA to PIP. If my payments reduce I might struggle to meet my monthly shortfall. I have been awarded or loaned at the same amount as before. This is just over half of my interest free mortgage payments so the shortfall is quite high. Also does just over half sound normal?
Sara (Debt Camel) says
I am not aware of any plans to make SMI more generous. I think if this had been planned it would have been introduced at the same time as the switch to paying it as a loan as a sweetener. I suppose it’s possible that the current mess and the publicity it is getting may induce a rethink but I am not optimistic.
Many people get a lot less than their mortgage interest payments because of the artificially low level that the SMI calculation rate is set at – half doesn’t sound unusual to me :(
If your disability benefits are cut so you can’t afford the mortgage, then you will need to consider your options. Unless you have enough equity to be able to downsize, this normally means selling and renting. This is such a short sighted government policy.
RMD777 says
Hello Sara, Thank you so much for your speedy reply. Could you advise who to speak to regarding my interest payment amount please? I am aware of advice restrictions if deemed financial advice. Regarding short sighted government policy there would indeed be much more monthly cost for me to up sticks and rent than my shortfall. If I am forced to sell my house I assume any equity would stop all benefits until it was all spent up? Perhaps this accounts for the short sightedness? Regards.
Sara (Debt Camel) says
“Could you advise who to speak to regarding my interest payment amount please” I’m not sure what you need to ask? If you don’t think the amount is right your local CAB can check it for you.
If you sell and rent then equity would affect means tested benefits but not PIP. Means-tested benefits are zero with over 16000 in savings, not affected with under 6000 in savings and reduced between 6-16000. CAB can explain in detail.
gmack says
haven’t heard a dickie bird from the dwp or serco about this change so unless i hear otherwise in next few days im assuming it will be my bank who tell me im in arrears because the smi payments have stopped
mark kemp says
Ive been looking at this as my son suffers from a mental illness that now stops him from working and he is not able to pay his full mortgage payments.
I helped him set up SMI and thought,… thank goodness hes now got financial help.
Yesterday I received a call from his Bank and a helpful lady whom assisted us with the SMI.
The bottom line is the banks will not want to accept the LOAN with interest SMI payment as THIS money Will never be owned by the BANK.
There will be increased repossessions if the mortgage capital amount slips into arrears which it will if you relied on SMI .
The Banks will have to monitor the government loans, never owing the money, they dont want to do this.
Watch this space, aggressive Banks will Reposses vulnerable peoples homes.
This is A nightmare government move thats had very little exposure or understanding. Typical underhand Conservative policy
Sara (Debt Camel) says
The mortgage lenders would no doubt have preferred the old SMI arrangements, but they do accept what is being done.
The statement “The bottom line is the banks will not want to accept the LOAN with interest SMI payment as THIS money Will never be owned by the BANK.” makes little sense as the SMI payments are gong to the bank just as they are now, the bank is not getting a loan from the government.
“There will be increased repossessions if the mortgage capital amount slips into arrears which it will if you relied on SMI .” For someone who takes the new SMI loan, their mortgage arrears will remain exactly what they would have been before the change – no more, no less.
There is an argument that mortgage lenders will be quicker to take action if mortgage arrears are rising.
“The Banks will have to monitor the government loans, never owing the money, they dont want to do this.”
There is no reason for a bank to have to monitor the SMI loan. They need to check the SMI payments are received, but that is exactly the same as at the moment.
Trevor says
Okay.
Since the housing element (SMI) is being removed from the benefits element (income support).
If the mortgage is in two parties names and one is in receipt of benefits. Can the party who is not in receipt of benefits live at the property and pay the full mortgage amount without affecting the party claiming benefits?
I understand that the DWP have control over ‘lodgers’ in so far as amounts over £20 have an impact on benefit entitlement of the claimant BUT a co-party in a mortgage who simply pays all of the mortgage is not paying the claimant ANY money.
With separated finances a mortgage co-party surely can have no impact on the benefits being claimed and since there is no claim for any benefits in relation to housing the DWP can surely have no legitimate claim of interest in the housing arrangements of anyone who is not claiming for housing benefits?
Sara (Debt Camel) says
I think you need to discuss your options with a benefits expert if you are living under the same roof as your ex but are financially separated.
Poppy says
It would seem that the company handling the SMI change over is behind schedule. I belong to another forum and several people (including myself) have received no confirmation about our agreement concerning the loan. After countless phone calls people are being told the scheme is behind schedule, some people are being told by their BS that they will have to cover the payments until the scheme kicks in, how are people on benefits meant to do that. This has been in pipeline for several years, the take up is low, what the heck is going on.
deni case says
What is the name of the other forum, please Poppy? I’d like to join also.
Poppy says
It is people on Facebook. I rang the DWP this morning, apparently my form to accept the loan has not been received, although I returned it mid-Jan (well when I say not received) not logged into the system is all they could tell me. My building society has written to me not bothered about SMI changing to a loan, but they did point out that I will go into arrears if no payment is received from the DWP on said date unless I make changes to my direct debit.
LharkStar says
I’m sure banks will be quite flexible with this as they know all about it, I’ve had a letter from mine too. Plus you’ve signed contracts that I would’ve thought HAVE to adhere to the start date of April 8, so if any interest on arrears occurred I would think the DWP would be liable to pay them. I might be being overly positive here, but I really can’t imagine anyone who has taken up the loan would be expected to be at a financial loss because of the DWP not sticking to their deadlines/contractual obligations.
LharkStar says
Also I know someone who spoke to the DWP about their application and was told that the backlog was due to a large amount of people deciding to take the loan up at the last minute. You can imagine many would’ve have been looking at alternatives and trying to figure out what to do before they went for it. I signed it pretty early on so I’ve already had the confirmation back from DWP.
Poppy says
Hope you are right I just want it sorted (one less problem out of the way).
Thanks for your reply, has helped me feel a little less worried.
Neil says
Yeah me too, rang this morning to see if everything has gone through ok only to be told they’ve not received my form yet, this is after ringing serco in November and not receiving paperwork till February (apparently many calls in November had been delayed for postage??) and then they only sent out one part of the CHARGE/DECLARATION form so sent that back and they were gonna send the other part out which they did and to which I’ve sent back only to be told they’ve not received it and someone gonna contact me within 48hrs.
I understand that this is a busy time for DWP but I’m trying to sort out payments to keep my mortgage lender happy and for peace of mind for me.
Poppy says
My second form has not arrived yet. Rang DWP today to be told they cannot chase it up until 5 working days have cleared which will be Friday it does not even show as being sent on their computer was asked ‘who told you another one is being sent’? Heavens above so much worry with no one able to give answers.
Yes, I want to keep my lender happy and put my own mind at rest, this is such a worry it’s my house, not some new shoes.
shafilia says
the point im trying to make is if the amount outstanding on your mortgage is roughly what your house is worth why stress over things because the dwp/serco wont be able to recoup the smi loan when the house is sold or you die because there is no equity and the loan payment scheme will get sorted sooner or later but on the otherhand if you do have equity you have no option but to accept the fact that the dwp/serco own a slice of your house and as stated the loan will get set up sooner or later so why stress
gmack says
I was correct still not heard a dickie bird from the dwp about all of this but got a letter from my mortgage provider yesterday advising me of the changes so i am glad i knew of the changes when osbourne first announced them in 2015 otherwise it would have been panic stations
RMD777 says
Hello Sara,
I have received my revised ESA letter in recognition of now receiving SMI Loan.
I used to receive £56.47 per week for Housing Costs and now do not. It is seems to say that I receive SMI Loan as part of my benefits as if the £56.47 is still paid.
The heading for Housing Costs has disappeared along with the £56.47. I am now liable for this amount. Is it that the government are reducing my benefits because I live in a mortgaged property rather than rented even though the latter would cost considerably more?
Please can you advise if this can be appealed and if this is common cause for appeal please?
Many thanks once a gain for your excellent resource.
Sara (Debt Camel) says
Have you signed up to take the new loan?
RMD777 says
Hello Sara,
Yes I signed the loan that replaced DWP mortgage assistance benefit with SMI Loan started 5/6th April which I believe I am still on. I heard something about LMI replacing SMI already but not aware of any changes. Thank you.
Sara (Debt Camel) says
OK, well it is my understanding that the loan will then be paid directly to your lender who should still be getting the same amount, but it doesn’t appear on your ESA letter as it is no longer given as a benefit. “LMI” is a new acronym that is being used for the new loan, but most government publications are still calling the loan SMI.
I suggest waiting until the end of the month and then checking with your mortgage lender that the payments have been credited to your mortgage account.
Alan says
Hello,
I am wondering if someone can help me.
I agreed to sign up for the new SMI Loan, I have filled in all of the forms but as yet I have not received any confirmation on whether the payments will continue to be sent to my mortgage lender.
Whenever I telephone the DWP they told me that there was a delay in the payments being sent out to my mortgage lender.
Yesterday I received a letter from my mortgage lender stating that I was in arrears for just over £300.00 and that I need to pay them a further £255.00 as they have not received any payment from DWP.
What should I do?
Please can someone help to advise me this situation.
Kind regards.
Alan.
Sara (Debt Camel) says
When did you send the documents back? Have you told your mortgage lender that you have signed up for the new SMI loan?
Andrew Mclay says
I am currently on JSA and as yet i have not taken the loan.If i decide to take the loan and lets say 6 months later i get a job,do i have to pay the loan back immediately or when i sell the property or is the loan written off?
Sara (Debt Camel) says
You do not have to start repaying the loan when you get a job, but you can choose to if you want to.
If you don’t pay off the loan, then it will be repaid when the property is sold. If there is not enough equity to repay it at that point, the remainder will be written off.
Those are the facts. The following points are more speculative, just things that you may want to think about when deciding whether to repay the loan when you get a job:
– getting the second charge removed from your house may make it easier to remortgage at a good rate
– the government loan is at a very cheap rate of interest. Your mortgage and any other debts you have are probably charging more, so you may want to use spare money to reduce those more expensive debts rather than repay the SMI loan.
– how secure is the new job? If you are worried about this, it would be better to save up any spare money into an emergency fund. If you lose the new job again in a years time that will then give you some money to hel0p you get through the 39 week wait until you can again get help with the mortgage.