Support for Mortgage Interest (SMI) used to be paid as a benefit to people who weren’t working – this ended on 5 April 2018. From 6 April someone newly applying can only get help with their mortgage costs through a secured loan instead. This is sometimes referred to as Loan for Mortgage Interest (LMI), but the old name SMI is also used.
If you have been getting SMI before April, there are now some transitional arrangements to help with the switchover.
I’ve written before about:
- whether you should agree to take the new loan (answer Yes, unless you have a better alternative)
- the very poor job the DWP has done about explaining the change and administering the sign-up process.
I still think the change should have been postponed. But it’s now taken place – so what will happen if you haven’t signed up to take the new loan?
The DWP has introduced some “transitional arrangements” and is also going to allow you to change your mind. The original regulations are here The Loans for Mortgage Interest Regulations 2017 and the amendments are here: The Loans for Mortgage Interest and Social Fund Maternity Grant (Amendment) Regulations 2018. Also see some Decision Maker’s Guidance notes on DMG 9/18 .
But as that lot may leave you no clearer, here are some common cases.
“I haven’t had a phone call from Serco yet”
On 21 March, there were over 30,000 people who had been sent a letter by the DWP but who had not had a phone conversation with Serco about the changeover. A further 5,000 people have not even had the initial contact letter from the DWP.
So if you are in this situation, you are not alone!
Until you have talked to Serco, the DWP has not yet formally made you an offer of the loan. The new transitional rules say that if you have not had the loan offer, your SMI payments will continue to be made to your mortgage lender until the 7th May.
So that’s one extra month’s payment – it would be a good idea for you to check with your lender that this payment is indeed made.
If you then have the conversation with Serco between 6 April and 7 May and say you want to take the loan, or you want to see the details, the DWP will send you the loan documentation. You then have 6 weeks to send this back, and if you return the completed loan forms, the DWP has another 4 weeks in which to set up the loan – during this extra time SMI will continue to be paid to your mortgage lender.
“I said I didn’t want the loan but will I be able to change my mind?”
27,000 so far have said they do not want the loan. After the 6 April the SMI payments to their mortgage lender will stop.
For a lot of them this may not have been a good decision. Even though taking a loan to repay your mortgage doesn’t sound good, it is a very cheap loan and you don’t have to make any repayments to it… so many people will not have a better alternative to it.
The DWP will let you change your mind. This could be because you realise you made the wrong decision, or because your situation changes, for example if a relative was going to help you with your mortgage payments but is no longer able to to that.
Providing you would still be entitled to SMI (for example you have remained on Pension Credit or ESA) you can get the new secured loan immediately, without a waiting period.
You can also ask for the loan to be backdated back to the point where your SMI payments ceased, or if you have made some mortgage payments yourself, you can specify the date at which you would like the loan to start. See below for the telephone numbers to call.
“I sent back my loan form but haven’t heard anything since”
A couple of people have commented on my previous articles that there is now a backlog with the DWP processing the loan applications – this is unsurprising because many people will have left it until the last minute to decide.
But if you returned your loan form to them more than a month ago and you have not heard anything, you should contact the DWP to check it has been received and is being processed.
How to contact the DWP about SMI
If you are over State Pension age:
Telephone: 0800 731 0469
Textphone: 0800 731 0464
Welsh language: 0800 731 0453
If you are under State Pension age:
Telephone: 0800 169 0310
Textphone: 0800 169 0314
Welsh language: 0800 328 1744
Poppy says
I agreed sent the paperwork back end of Jan, apparently, it has been lost, so being sent again.
Not only is this stressful but it is worrying, my property is all I have (such as what will be left when sold and the loan paid back) you would think they would take more care, the scheme has not started and already it is running into difficulty. I have no problem with the loan (well what choice was there) I want to stay in my home and this offer gives me that, it would be nice if they could be more professional the building societies don’t lose your paperwork this is people’s homes at risk here.
Debbie says
Same here. It’s an omnishambles
katrina says
I’m the same, just had threat of repossession from my lender, called DWP to be told my forms were lost and i’ll need to go through the whole process again. My lender wants over £700 off me or they’ll start proceedings.
noone says
Yes mine have been lost by DWP too. i sent them back in January. They agree they did receive them but say have been lost. I am so stressed. Now waiting for forms to be sent out to me again
Sue Fletcher says
Apparently my forms have been received by DWP but have not yet been dealt with! I had to phone today (hanging on for nearly 30 mins) to find out this info as they had not sent any recognition they had actually got the paperwork. When I asked how long before I had any news about my application being accepted, the lady did not seem to know – I felt sorry for her as she seemed to be as much in the dark as the rest of us. I phoned them because I got a letter from my mortgage co. asking if I had actually done anything about the change in benefits ie: applyng for the loan or other actions. If they are getting “antsy” about this, how does DWP think this makes the rest of us feel? I dont suppose it really bothers them though – as long as they get their money.!
Sara (Debt Camel) says
How long ago did you end your loan forms back?
Sue Fletcher says
Cant really remember sorry – my memory is not what it was! Serco contacted me in November so sometime between then and now but I will just have to wait I suppose – they must have one hell of a backlog!
Sara (Debt Camel) says
So it wasn’t in the couple of weeks? I am interested in just how large this backlog is!
Sue Fletcher says
Me as well. I will let you know if and when I hear anything.
steven rossiter says
I am still considering the DWP offer. I called Serco several times for clarification. They seem to be unable to offer any meaningful advice. relating to SMI. For context, my illnesses were caused largely by a significant assault which I suffered from a local assailant who remains at large. For safety Police advise I move away from the area.
Question 1
Should I choose not to take out the DWP loan, correspondence from Serco advises that I may seek help from friends and family. I ask whether such help would be regarded as income by the DWP?
Question 2
Again if I seek help of friends and family and if such help depletes their own savings are they putting themselves at risk. For example will the DWP consider that such help removes its obligation to support the helper due to “capital deprivation”?
Question 3
If I sell my home and port my mortgage over to a new home is the loan repayable at the point of sale or does the SMI loan carry over to the new property?
Question 3a
If the loan does not port with the Mortgage as described in question 3, then do I have to wait the standard 39 weeks before I can claim for a new loan arrangement? Would I qualify?
Question 4
If I take the loan do I have to ask permission from the DWP before I move to another property as is the case prior to the new rules?
Kind regards
Sara (Debt Camel) says
1. No it will not
2. Yes that could happen, if you were getting help from someone who has assets over 16k at the moment, then these dropped to under 16k because of paying your mortgage. Normally with assets under 16k someone would get help from means tested benefits but the DWP may well say they have deprived themselves of capital.
I’ll do some research on the others.
steven rossiter says
Thank you Sarah. Seems to me your answer to question 2 could mean that new SMI legislation could then deprive more than 1 party of Welfare support. The fact that Serco encourage support from family and friends as legitimate in their correspondence makes this piece of advice particularly loathsome, erroneous and arguably complicit in a Welfare claimant’s demise. I asked the DWP myself. I also asked them about question 3 and 4. It was the same answer. Through my MP I have therefore also now asked Kit Malthouse.. We await his response.
Sara (Debt Camel) says
2 more answers
Question 3
If I sell my home and port my mortgage over to a new home is the loan repayable at the point of sale or does the SMI loan carry over to the new property?
Answer – the loan is repaid at the point of sale.
Question 3a
If the loan does not port with the Mortgage as described in question 3, then do I have to wait the standard 39 weeks before I can claim for a new loan arrangement? Would I qualify?
Answer – no you would not need to wait, you would still meet the eligibility criteria so you should get the SMI straight away.
Jessica Jessica says
It is so great to see someone has actually read the regulations and understands the transitional provisions! Thank you.
However I cannot see where you get the 7th May 2018 date from (i.e. the date you say the SMI payments will be made until, in circumstances where the loan offer has not yet been made).
Please can you clarify whether this date is provided in the legislation or regulations?
Thank you very much indeed
Jessica Jessica says
PS
Further to my previous comments it appears that there is a more recent version of the LMI regulations than I appreciated, since I note you refer to reg 19A thereof. Reg 19A does not appear in the original version of the LMI Regulations and I cannot find the amended version, or reg 19A, online anywhere.
As I stated in my first comment a few moments ago, without reg 19A the LMI regulations make no sense because there is no tigger date in reg 19 from when the six week period to return the signed loan agreement etc is to commence. So I would very much appreciate being able to read reg 19A.
Unfortunately your above link to the actual LMI regulation is defective; it merely repeats the link to the maternity regulations.
Are you perhaps able to provide a working link to the amended LMI regulations which include section 19A?
Thank you very much again
Sara (Debt Camel) says
Here are the amendments to the LMI regulations http://www.legislation.gov.uk/uksi/2018/307/made. For clarity I will add them to the article above.
ANTHONY TOWNSEND says
Thank you Ms Camel, – very helpful answers to questions I posed to DWP and CAB, neither of which organisations were able to illuminate…
Peter says
Hi, I’ve read the above comments and I believe there is further additional information. I have continued to receive SMI payments yet i did not request the loan, the last one was May 17th. Previously I went through the standard waiting period and received SMI payments under JSA which expired in September 2016. I then moved from JSA to ESA in September 2017 and although I believe the SMI payments should have been automatically restarted as there had been no break in receiving benefits I had to complete a form to send to my Mortgage provider again. Could the fact I had to ‘re-apply’ mean that technically I had passed the July 7th 2017 deadline and as such, unbeknown to me I havebeen actually getting an LMI and not SMI ? I would like to think there is a transitional period and that this last payment is the final one. Lastly maybe perhaps I fall into the category of vulnerable people due to my disability – this is referred to in this article https://www.moneysavingexpert.com/news/loans/2018/03/if-the-state-helps-pay-your-mortgage-act-now-or-itll-be-stopped
Please can anyone shed any light on this please without me having to go through the stressful process of speaking to DWP on the phone, which I avoid at all costs due to my severe anxiety and pronounced stammer. Thanks in advance
Sara (Debt Camel) says
Hi Peter,
Have you been receiving SMI since September 2017?
Have you had any letters about SMI stopping and having to apply for a loan?
Peter says
Hi thanks for the swift reply – yes I’ve been receiving SMI since Sept 2017 (I had SMI previously while on JSA) – I received letters off DWP to say that SMI was ending and I was instructed to do nothing if I did not want the loan. I filled in no paperwork.
Sara (Debt Camel) says
Ok then you don’t need to worry about the July 2017 “change”, this isn’t applicable to you. No one who has been getting SMI has actually had a loan without realising it.
But your SMI is now going to be stopping. How will you be able to manage without it? The loan being offered is really cheap and you don’t have to make any repayments ever, it will be repaid when your house is sold. You can change your mind if you want and say you do want to get SMI as a loan, there won’t be a waiting period.
The people the DWP seem to refer to as vulnerable are people who lack the mental capacity to make a decision on a loan eg because of dementia. You may be on the list but it’s unlikely and you shouldn’t assume you are.
If you can’t face talking to the DWP, could you go to your local Citizens Advice and they could phone for you? You would just have to give authority for the DWP to speak to them.
Peter says
Many thanks for your help and advice it is much appreciated, I may ask for the loan after all.
Rob says
We went onto IS last August when I gave up work to care full-time for my disabled wife. I filled in basic information form and forwarded to mortageg lender in March. Was told by DWP in April we would get SMI loan payments in May. Had no contact since – had no call from Serco, or any paperwork. This week will have been on IS for 10 months paying mortgage from limited savings/juggling other benefits. This can’t go on for ever! Rang DWP today – they can’t tell me anything, or when SMI section will be in touch. She said they are overloaded; they have sent some payments out to lenders but they have been returned as lenders didn’t know what they were for! She finally suggested I ring back ‘each week’ as if it was going to take months! What a mess.
We are in a worse situation than those already getting SMI – at least they should be getting continued payments while loan paperwork sorted- does SERCO have a phone number I could call them on to get the process moving?
Sara (Debt Camel) says
You have called the DWP numbers in the article above?
You haven’t been sent any information or the loan paperwork?
I’m not sure if new claimants need to talk to Serco or not. I will find out.
Sara (Debt Camel) says
I have asked the DWP what the procedure is for new SMI applicants and they say:
“The MI12 form is still used for new claims of Support for Mortgage Interest (SMI), this has not changed following the move from SMI being a benefit to a loan. The MI12 is sent to you by DWP and you pass it to your mortgage provider or loan company who complete the form and send it to DWP.
If you are entitled to a SMI Loan your case is referred by DWP to Serco who will undertake an informed discussion with you by telephone explaining what the loan is and how it works.
If you wish to apply Serco will send you the loan forms to complete and return to DWP. Once you return the Loan forms DWP will inform you of your loan entitlement amount and start payments.”
Rob says
Serco eventually rang 26th July. Very short conversation when I told them I had read leaflet and had no choice but to take the loan. Paperwork received by me shortly after and returned to them 4th August. I’m now waiting for payments to start and to see if they backdate loan interest payments to 1st May (£1000+) when ‘support’ should have started (i.e. end of 39 week period).
Sara (Debt Camel) says
They definitely should backdate if you asked for that.
Jayne says
Hi
I have been getting SMI since November 2017 as I am receiving Income Support.
I have had no contact from Serco or DWP about taking out a loan and the SMI is still being paid towards my mortgage.
Do you know if they can start a loan for me without my knowledge and if there is a reason I am still receiving payments.
I don’t want to take out the loan but i am worried by contacting them i will loose payments if they are just struggling to deal with a back log
advise needed please
thanks
Sara (Debt Camel) says
A loan can’t be started without you signing the paperwork.
If your mortgage lender is still being paid SMI each month I can’t see there is any hurry to do anything. The longer this carries on the more chance there is that the DWP will sort out the backlog and be able to deal with your case speedily.
katrina lyall says
im in the same boat as above, threat of repossession as they DWP lost my LMI application forms.
Sara (Debt Camel) says
Hi Katrina,
is this a new application for SMI as a loan? Or are you switching from the old SMI paid as a benefit? Also who is your mortgage lender?