At East Dunbartonshire Citizens Advice Bureau in west-central Scotland, we are here to help. If you live or work in the East Dunbartonshire area, we can advise you on a support for mortgage interest loan. As well as personalised advice on paying your winter bills, money, debt, budgeting, financial issues and more. Please contact us here, chat online or call us on 0141 775 3220. If you reside outside of East Dunbartonshire, please contact your own local Citizens Advice Bureau for assistance. Find them here.
Support for Interest Mortgage Loans
If you’re struggling with your mortgage, you may well have heard of the support for mortgage interest loan, or an SMI loan. They’re often suggested to those on benefits as a way to ensure you do not risk losing your home while things are a little tougher or tighter than usual or when something changes in your financial situation. Designed to provide support to make paying your mortgage that little bit easier, a mortgage loan can help make a huge difference if you’re eligible for one.
What are SMI loans?
SMI stands for Support for Mortgage Interest and it is a loan. Provided by the Department of Work and Pensions (DWP) it is used to pay toward the interest on your mortgage or another home-related loan. A Support for Mortgage Interest loan can make the difference between keeping or losing your home. And can be used on your interest or on another home loan, even though their name suggests they’re only for mortgage loan help.
You will be charged interest on an SMI, meaning that you’ll eventually end up paying back more than you borrow, but it is still one of the cheapest ways of borrowing money for many people.
Who is eligible for an SMI?
SMIs are available to anyone who owns a home or is on shared ownership and receives:
- Income-based jobseeker’s allowance
- Income-based employment and support allowance
- Income support
- Universal credit
- Pension credit
Getting an SMI will not impact these benefits, and while you will have to pay back the loan, you will not be forced to take it out of your benefits.
How much SMI will you get?
Those on Job Seekers Allowance, Employment and Support Allowance, Income Support or Universal Credit, then the DWP will usually pay the interest on up to £200,000 of your mortgage.
For those on Pension credit, this drops to £100,000, unless your Pension Credits started within 12 weeks of your other benefits stopped.
If you own your home with someone else, you may only get interest for your share of the mortgage. So if you’ve got a mortgage of £200,000 but it’s with a partner or family member, DWP might only give you half of the total amount for your mortgage loan help.
The money you receive from DWP in your SMI may depend on money you receive from elsewhere, such as work, a mortgage protection policy, or even a lodger. The latter could even include an adult who could pay rent, i.e. a child, flatmate or family member.
When will you have to pay it back?
You only have to pay back an SMI loan when you sell your home or somebody inherits it/is given it. The DWP will take the money after your mortgage has been paid. If you go bankrupt, this might be different. You may have to pay back the SMI loan earlier. This is the same if you make a formal agreement to pay any debts you have.
Should your partner live in your home and inherit it when you die, they will not have to pay the loan straight away, it can be paid when they die. However, should anyone else inherit the home, they will have to pay the SMI back first.
If there isn’t enough money for you to be able to pay back your support for mortgage interest loan after your mortgage has been paid, you don’t need to worry. The DWP will cancel the debt. They will only pursue the debt if they think you deliberately sold the house cheaply or gave it away instead of selling it.
How to apply for SMI
Check if someone else has to agree
The first step in the application process is to determine whether it’s just you applying. If someone else lives with you, even if they’re not on the mortgage, they will need to agree to the loan too.
Request an application form from the benefits office
You might find that you already have an application form. The DWP will send you one if they think you might be eligible. If you don’t have one, contact the benefits office to request one.
Mandatory reconsideration
Once the application is in, you will have to wait for DWP to decide. If they decide no, you are allowed to ask for mandatory reconsideration. This then prompts DWP to take another look at your application.
When will the SMI payments start?
Once the DWP has decided that you are eligible for SMI. They will also have to determine how much you can get, you enter the waiting period.
The length of this waiting period will depend on what benefits you are on.
If you get:
- Jobseekers Allowance
- Employment Support Allowance
- Or Income Support
SMI will usually start 39 weeks after you claimed your other benefits.
If you get Universal Credit you can usually get SMI starting from 3 months after your claim.
People receiving Pension Credit will get SMI as soon as possible.
What are the other options?
An SMI loan is a good option but there are other ways to help pay your mortgage. It is always important to consider and compare every option. You could always get a lodger, change your mortgage payments, or even get mortgage loan help from elsewhere.
Before filling out an application for SMI, figure out how much money each option will give you. See how it will affect you now and in the long run. If you’re not sure what move to make, give us a call for advice.
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