Housing Costs: more information
Housing Costs Defined
Help with housing costs is only possible as part of a claim for one of the following means tested benefits:
- Income Support or
- income-related Employment & Support Allowance or
- the guarantee credit part of Pension Credit or
- income-based Jobseekers Allowance
If you receive Universal Credit see our Support for Mortgage Interest under Universal Credit help page
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.
You can only get help with your housing costs for the home in which you normally live. As well as interest on a mortgage it is possible to get help with the interest on loans for some types of repairs and improvements to your home.
However, not all loans are covered. They must be for repairs 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 doubts as to whether a loan will qualify. It is also possible to get help with some types of service charges (e.g. communal heating or cleaning bills) – for more information see charges, ground rent and other eligible housing costs.
SMI cannot help you pay:
- the amount you borrowed (only interest on the mortgage is paid)
- anything towards insurance policies you have
- mortgage arrears
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.
SMI became a loan in April 2018
Since 5 April 2018 SMI is a loan which means any SMI you receive from this point must be repaid with interest when you sell or transfer ownership of your home. Before this date the beneft did not need to be repaid.
Standard interest rate
In calculating your housing costs the Bank of England’s average mortgage interest rate is used. From 18 June 2017 this is 2.61% (it was previously 3.12%). The standard rate applies regardless of what your own mortgage rate is.
Some homeowners may have actual interest rates that are lower than the standard rate used to calculate SMI payments. This means they receive more SMI than required to meet the payments due to their lender. These payments can only be credited to their mortgage account.
How much of my loan will be met?
You should enter the outstanding balance on your mortgage or other housing loan in the calculator. However, there is a cap of £200,000 or in some cases £100,000. The cap rules are:
- If you claim Pension Credit, and you want help towards mortgage interest payments, you will be able to claim for mortgage interest on up to £100,000 of your mortgage
- If you claim Income Support, income-related Jobseeker's Allowance or income-related Employment and Support Allowance you will be able to claim for mortgage interest on up to £200,000 of your mortgage.
In reality the amount met by the Department of Work and Pensions may be less - if the amount of loan met is restricted then the help you actually receive will be lower than the figure estimated by the calculator. In some cases this may mean that you are not entitled to any payments at all. The Department of Work and Pensions also has the power to restrict the amount of loan they will meet if they believe that your housing costs are excessive (e.g. that the property is too big for your household’s needs or the area you live in is much more expensive than other areas nearby where there are suitable properties).
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.
When will I start to get help?
Most people have to serve a waiting period of 39 weeks before they actually receive any help with their housing costs.
There is no waiting period if you receive help through Pension Credit.
Payments of help with housing costs are made directly to your mortgage lender.
If you used part of your mortgage for other purposes you cannot get help with that part of your loan. For instance, if you consolidated your debts by re-mortgaging you can not claim for that part of your mortgage.
If you receive payments from a mortgage protection policy this can affect the amount of help you will get.
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 help. 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.