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Support for Mortgage Interest

By: Louise Smith, barrister - Updated: 8 Nov 2016 | comments*Discuss
 
Mortgage Interest Support Benefit

Support for Mortgage Interest is a state benefit payable to some borrowers who need help with their mortgage repayments. Support for Mortgage Interest should not be confused with Homeowners Mortgage Support, a scheme under which some mortgage companies will agree to reduce the payments on a borrower’s mortgage for up to two years because of a temporary financial difficulty. Presumably because of the similar name, these two schemes often seem to be confused.

Eligibility for Support for Mortgage Interest

To be eligible for Support for Mortgage Interest a borrower must already be in receipt of one of the following state benefits:
  • Income Support
  • Job Seeker's Allowance
  • Employment and Support Allowance
  • Pension Credit
  • Universal Credit

Applying for Support for Mortgage Interest

SMI is not paid to you but (normally) direct to your lender following a waiting period of 39 weeks for more benefits. It’s usually paid on the same day as your benefit. Once payments start they may include a back payment to cover the period between when the claim was made and when payment began. If you're on pension credit there is no waiting period.

Applications should be made to JobCentre Plus or, for those on Pension Credit, to The Pension Service. Job Seeker’s Allowance claimants can usually only claim Support for Mortgage Interest for up to 2 years. If a couple is living together and are both named on the mortgage, they will only be entitled to Support for Mortgage Interest if they are both individually entitled to one of the other qualifying benefits.

Different rules may apply to borrowers:

  • Who are on pension credit. For example there is no waiting period between claiming and payments starting.
  • Who are vulnerable – such as a single parent.

How Does Support for Mortgage Interest Work?

Support for Mortgage Interest – as its name suggests – is a benefit which works by contributing to the interest part of a mortgage repayment. It will not help with any part of the capital due. Borrowers may be entitled to help with the interest on up to £200,000 of the mortgage. Homeowners on Pension Credit are only be entitled to help with the interest on £100,000 of the loan. However, help may be available on up to £200,000 for applicants who claim Pension Credit within 12 weeks of ending a claim for Income Support, Job Seeker’s Allowance or Employment and Support Allowance.

Payments are generally made directly to the lender and may be made on a four weekly basis rather than per calendar month. No additional payment will be made in respect of any arrears that may have built up. However, a standard interest rate is applied to all claims for Support for Mortgage Interest. This is currently higher than the interest rate on many mortgages. Therefore, it is possible that the amount of Support for Mortgage Interest received could exceed the interest part of the mortgage instalment.

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