Help with housing costs
What is Support for Mortgage Interest?
If you have a mortgage or housing-related loans you may be able to get help towards the interest you pay via means-tested benefits but paid directly to your lender, this is called Support for Mortgage Interest (SMI). This can't help towards capital repayments. To be eligible you must claim, Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Universal Credit or Pension Credit.
There is a limit on the size of the loan that SMI will help with the interest on, the limit is usually £200,000 but if you are a Pension Credit claimant the limit is £100,000 (unless you were receiving SMI on a loan up to 200,000 in the 12 weeks before moving on to Pension Credit).
On 5 April 2018 SMI became a loan from the government secured on your property (prior to this date it was a benefit). This means any SMI you receive from this point must be repaid with interest but not until you die, sell or transfer ownership of your home. If you die and your property passes to your partner the loan won't become repayable until they die, sell or transfer ownership of the home. If there isn't enough equity in the property to repay the SMI loan it will be written off. You can pay off an SMI loan at any time but the minimum payment accepted at a time will be £100.
What loans can Support for Mortgage Interest help with?
SMI (loan or benefit) can only help with your housing costs for the home in which you normally live. It could help with the cost of interest on the following types of loan:
- A mortgage or remortgage
- A loan taken out to pay a service charge for essential repairs/improvements
- A loan taken out to pay for certain essential repairs/improvements directly
For Universal Credit claimants the loan must also be secured on the property for it to be eligible for SMI.
Essential repairs/improvements are those needed to keep the property fit to live in, e.g providing a bath, shower or toilet; repairing structural defects; adaptations for a disabled person. Seek further advice if you are in any doubt as to whether your loan will qualify.
SMI cannot help you pay:
- the amount borrowed (only the interest)
- anything towards insurance policies you have
- mortgage arrears
- any part of your mortgage that was taken out for other purposes, for example, if you consolidated your debts by re-mortgaging you can not claim for that part of your mortgage.
If you take out a mortgage/loan when you are on one of the benefits mentioned above (or in a break between two periods on benefit separated by 26 weeks or less), you may not be eligible for any SMI. Similarly if you already had your mortgage/loan, but increased it after you started claiming benefit, you may only get interest payments on the amount you originally borrowed. Exceptions to these rules can be made in specific circumstances e.g. you have taken out a loan to buy a home better suited to the needs of a disabled person, or to provide separate bedrooms for a boy and girl aged 10 or over.
To find out about the other costs associated with housing which you may get help with, see our charges, ground rent and other housing costs help page.
When will I start to receive Support for Mortgage Interest?
The calculator provides an estimate for the amount that you could receive in SMI after you have served a ‘waiting period’. This is an initial period after you first claim benefit when you will get no SMI, or will receive help at a reduced rate. Most people have to wait up to 39 weeks but there is no waiting period for people claiming Pension Credit.
How much Support for Mortgage interest will I receive?
There are several restrictions placed on how much help you can receive. The interest is calculated using a standard interest rate of 2.61% (currently) regardless of the actual interest rate on your mortgage or loan. This rate will only change if the Bank of England's average interest rate changes by more than 0.5%.
Any loan taken out to adapt your property for the special needs of a disabled person is ignored when working out if your loan exceeds the cap. If this applies to you it is possible in certain circumstances, that you might get more help than the figure estimated by the calculator.
The SMI entitlement provided by the calculator assumes that the full amount of your loan will be met (up to the maximum limit). However, in some circumstances the Department of Work and Pensions may further limit the amount of loan they'll meet, for example, if they believe that your housing costs are excessive. If this applies to you then the amount of SMI could actually be lower than our estimate. In some cases this may mean that you are not entitled to any SMI at all.
The amount claimed for housing costs can be reduced if other adults (excluding your partner) normally live with you. For more information see deductions for non-dependants.
If you receive payments from a mortgage protection policy this can also affect the amount of help you will get.
The rules determining how much help you will get with your housing costs are extremely complex and we would strongly advise you to get more detailed advice about the help that you are likely to receive.