SMI scheme extended for borrowers on Universal Credit


The government’s ‘support for mortgage interest’ (SMI) loan scheme is now open to people who have been on Universal Credit for three months, rather than the previous nine months.

In addition, claimants no longer have to be unemployed to be eligible for the loan, which helps cover interest payments for a mortgage, or a home repairs and improvements loan, worth up to £200,000.

This means an additional 200,000 claimants will be able to get quicker support from today.

Mortgage interest loans will be automatically offered to eligible claimants after three months on Universal Credit. If they reject the offer initially, these homeowners can start claiming the loan at any point later.

Loans need to be repaid when claimants sell their home, but can also be transferred to a new home if needed.

The government’s minister for social mobility, youth and progression, Mims Davies, comments: “The fear of losing your home when you have fallen on difficult times is incredibly stressful and makes getting back on your feel all the more difficult.

“This increased support is an important lifeline to help provide stability for those who are seeking to find work and move back towards long-term prosperity.”

The news has been welcomed by the Building Societies Association (BSA) as a positive move which could help prevent people from getting into serious mortgage arrears.

It particularly welcomes the removal of the zero-earning rule for those on Universal Credit, meaning homeowners will not lose their entitlement to SMI as soon as they find work.

BSA head of mortgage and housing policy Paul Broadhead says: “This is a common-sense change from the government. Enabling access to the SMI loan much earlier could well be the difference between a family keeping a roof over their heads or them facing the prospect of their home being repossessed and having to find an alternative, government supported, rental accommodation.

“Also, as SMI is a loan not a benefit, the changes introduced today should not have a long-term financial detriment on government expenditure.”

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