Little-known way Universal Credit households can get housing help boost worth £7,000
HUNDREDS of thousands of people on Universal Credit or other benefits could be getting extra help with their mortgage payments.
A little-known scheme called Support for Mortgage Interest (SMI) is aimed at helping benefit claimants who pay be struggling with their monthly payments.
It can give a boost of hundreds of pounds a month to those who may otherwise be at risk of missing mortgage payments.
Roughly 200,000 households receiving Universal Credit have mortgages, according to government figures.
SMI is a loan used to pay the interest charges on mortgages.
If you're on Universal Credit, SMI will help you pay the interest on up to £200,000 of your mortgage.
More on Universal Credit
Those on Pension Credit can get help on up to £100,000 of their mortgage.
The interest rate used to calculate the amount of SMI you'll get is currently 3.66%.
That means if you have £250,000 of your mortgage left to pay and you're eligible for SMI for up to £200,000, at the current SMI interest rate you’ll get a loan of 3.66% of £200,000 across the year.
That's equivalent to £7,320 a year or £610 a month.
Most read in Money
It's worth noting that SMI is not free money and there is a catch.
You will need to pay it back as a lump sum when you sell or transfer your home ownership, and there is interest to pay.
However, it is designed to help people who are struggling with their payments so the interest charged is relatively low.
The current SMI repayment rate is 4.1%.
Meanwhile the average mortgage rate is currently 4.62% for a two-year fix or 4.58% for a five-year fix, according to Rightmove.
The Government can change the SMI repayment rate twice a year.
If you die before you've paid off your SMI loan, it will not need to be repaid if your home is left to a surviving partner.
But the loan must be repaid if your home is left to anyone else or it's sold.
If you're struggling with your mortgage payments it's still worth contacting your mortgage lender for help first.
Other people may have enough savings to cover mortgage payments for the short term, so they might opt not to apply for any extra support.
Who is eligible for SMI?
You can claim SMI if you're on Universal Credit or other specific benefits.
The other qualifying benefits are:
- Income support
- Income-based jobseeker's allowance (JSA)
- Income-related employment and support allowance (ESA)
- Pension credit
The scheme was extended in 2023 to make more people eligible.
Under the new rules, you only have to have been claiming Universal Credit for a minimum of three months to apply.
Before the change, it was available only to those who had been claiming Universal Credit for at least nine months.
If you're on Pension Credit you can start getting the loan straight away.
Those on Income Support, income-based JSA or income-based ESA must have been on it for 39 weeks in a row.
How can you apply?
You should contact the office that pays your benefit to find out if you're eligible for SMI.
If you get or have applied for income support, income-based JSA or income-related ESA, contact Jobcentre Plus.
You can do this by calling 0800 169 0310.
If you get or have applied for pension credit, contact the Pension Service by calling 0800 731 0469.
Those on Universal Credit can either:
- Add a message to your journal on your Universal Credit account
- Contact the Universal Credit helpline on 0800 328 5644.
What other mortgage help is available?
Missing a payment on your mortgage can have a severe impact on your credit rating.
If you struggle with mortgage repayments over a longer period of time, lenders could start legal action that could end up costing you your home.
If you think you're going to have a problem with your monthly mortgage repayment you should get in touch with your lender immediately.
They have certain schemes in place to help you if you're struggling.
You can temporarily ask to switch your mortgage to interest-only, or extend your term to bring monthly payments down.
You won't need to to switch your mortgage to interest-only, or extend your term to bring monthly payments down.
If you do this it won't affect your credit score for the first six months.
If anyone using the temporary measures decides to return to their original plan within six months, they are free to do so.
You can also ask your lender about the Breathing Space scheme if you find payments unaffordable.
Under this scheme, no debts will earn interest, and no fees will be added for 60 days.
You'll be protected from debt collectors and bailiffs.
You may also be able to apply for a payment holiday, which is when you don't need to pay anything.
However, interest and charges may continue to be added, and missed payments will need to be made in the future.
Every company has a different policy, so you'll need to get in touch to find out what support is available to you.
Other things you can do include contacting your local council to see if they have any schemes to help struggling families.
For example, the Household Support Fund could help you get free cash, food vouchers, or help for bills like rent and energy.
You should check what your specific council offers as it varies across different areas.
Another option is to check if there's any other benefits you're entitled to.
Read More on The Sun
Entitledto's free calculator works out whether you qualify for various benefits, tax credits and Universal Credit.
Debt charity StepChange also has a benefits checker which is free to use and won't record your results.