Thousands of Northern Ireland homeowners face mortgage repayment crisis

With the imminent announcements about the Government's spending review, predicted job losses and already record increases in Northern Ireland's unemployment figures, the government are now proposing to cut the support provided by the Support for Mortgage Interest (SMI) scheme.

The SMI scheme aims to assist unemployed homeowners in receipt of particular means-tested benefits with their mortgage interest payments. The scheme originally calculated mortgage interest at a fixed figure of 6.08% but in June 2010 the emergency budget set-out that it will be decreasing to 3.63% from the 1st October 2010. This will leave many unemployed homeowners reliant upon the scheme, who are already struggling to make ends meet, at risk of plunging into arrears and ultimately losing their homes.

Advice NI, the support network for independent advice centres in NI, has grave concerns that the cut in Support for Mortgage Interest will make it harder, and in some cases impossible, for many people to stay in their homes.
Kevin Higgins, the Head of Policy with Advice NI outlined the concerns:
"Figures released by the Department for Work and Pensions estimated that nationwide there are approximately 225,000 benefit claims which include Support for Mortgage Interest. As a result of the proposed changes, about half will see a shortfall in their interest payments. In terms of Northern Ireland, 14,000 claims include Support for Mortgage Interest and therefore around 7,000 households are likely to face shortfalls in their interest payments.
Inevitably this situation is going to place households already in receipt of the lowest levels of income into severe hardship; as these households do not have any additional disposable income to meet this shortfall."
"Since November 2009 Advice NI's Debt Action NI project has seen 1,224 clients with almost £19million pounds worth of debt. There have been 159 mortgage arrears cases dealt with totalling £1.9m and we can only see this situation getting worse."
For illustrative purposes, a family with 2 children on benefits with a £100,000 interest only mortgage at 5% will have a monthly shortfall of £114.16. This amounts to approximately 12% of their typical monthly income on benefits.
Michael Lyttle, a Debt Action NI adviser has come across a number of clients already who will be severely affected by the proposed change. Speaking about the proposals Michael said:
"Clients who have experienced redundancy and unemployment because of the economic situation are already under extreme financial and emotional pressure and this proposal could mean that they have to find up to an additional £200 per month depending on their mortgage arrangements."
Anyone who currently receives support via the Support for Mortgage Interest scheme and is concerned or is struggling to make payments should seek help from an Advice NI adviser.