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