Changes to Support for Mortgage Interest (SMI)

SMI pays all or part of the interest on a claimant's mortgage if they are in receipt of a qualifying benefit. It does not affect the capital amount.
At present SMI is a non-repayable benefit. But one of the measures in the Welfare Reform and Work Bill is to change the payments into a loan from 2018. This will take the form of a charge being placed on the property which will be repaid when a claimant returns to work or sells their property. Alternatively it will be recovered from their estate after they die. The charge will remain until the loan is repaid in full.

Not only will the loan have to be repaid, but interest will be charged on it and there will be an administration charge on top. The changes will affect both current claimants and new claimants from 2018.

The DWP claim that the change will increase claimants’ life chances and reduce repossessions but as there is a waiting period of 9 months we have huge concerns as to how will the lender react to the potential of long term arrears.