Help with mortgage interest payments

If you're a homeowner and get certain income-related benefits, you may qualify for help towards mortgage interest payments. This is called Support for Mortgage Interest (SMI). SMI is paid as part of your benefit, however, this will change in April 2018. Find out about SMI and the changes coming up.

About SMI

SMI is sometimes known as ‘help with housing costs'. It  can help towards mortgage interest payments:

  • for a mortgage
  • for a loan to buy
  • to improve your home

It cannot help you pay:

  • the amount you borrowed (only the interest on the mortgage is paid)
  • insurance policies
  • mortgage arrears

SMI is normally paid directly to your lender. There’s no guarantee that you will get SMI for a loan you take out.

Changes to SMI from April 2018

From 6 April 2018, SMI will no longer be paid as part of your benefit. Instead, you may be offered an SMI loan to help with your housing costs. 

SMI loans offer the same level of support for paying your mortgage interest.  However, you will need to repay the loan, with interest, when you sell or transfer ownership of your home.

If you want to pay the loan back more quickly, you can make voluntary repayments.  The minimum voluntary repayment is £100 or the outstanding balance if it’s less than £100.

Interest is added to SMI loan payments.  The interest charged can go up or down but won’t change more than twice a year.

If you receive SMI, you’ll get a letter before March 2018 telling you about the options available.

Eligibility

You may be eligible for SMI if you are a homeowner and are getting:

If you claim Income Support, ESA or Universal Credit

If you get Income Support, income-related ESA or Universal Credit:

  • it will be 39 weeks from the date you claim before you get SMI - due to the changes, if you are claiming after 7 July 2017, you will only be offered SMI as a loan
  • you will be able to claim for mortgage interest on up to £200,000 of your mortgage
  • you will be able to claim SMI for as long as you receive Income Support, income-related ESA or Universal Credit

If you claim Jobseeker’s Allowance

If you get income-based Jobseekers Allowance:

  • it will be 39 weeks from the date you claim before you get SMI - due to the changes, if you are claiming after 7 July 2017, you will only be offered SMI as a loan
  • you will be able to claim for mortgage interest on up to £200,000 of your mortgage
  • you can only get paid SMI for up to two years - from 6 April 2018 the two year restriction will be removed

If you claim Pension Credit

If you claim Pension Credit:

  • you won't have a waiting period before you receive SMI - your SMI will be paid as a benefit until 5 April 2018; from 6 April 2018 it will be offered as a loan
  • you'll be able to claim for mortgage interest on up to £100,000 of your mortgage
  • you’ll be able to claim SMI for as long as you receive Pension Credit

You can also apply for an SMI loan in advance by contacting the Northern Ireland Pension Centre. Payments will start from 6 April 2018.

Moving to Pension Credit from other benefits

If you already get SMI under the rules that apply to other benefits, you can continue to get help with your mortgage interest on up to £200,000 of your mortgage. This applies if you move onto Pension Credit within 12 weeks of ending a claim for:

  • Income Support
  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance
  • Universal Credit

You can continue getting SMI for as long as you are entitled to Pension Credit.

How SMI is calculated

The interest rate used to calculate SMI is currently 2.61 per cent.

Some homeowners may have lower interest rates than the rate used to calculate SMI payments. This means they receive more SMI than needed to meet the payments due to their lender. These payments can only be credited to their mortgage account.

Mortgage Interest Run On

You may get an extra four weeks' SMI if your Income Support, income-based Jobseeker’s Allowance or income-related Employment and Support Allowance is going to stop because:

  • you start work of 16 hours or more per week
  • your hours of work increase to 16 per week
  • your partner starts work of 24 hours or more per week
  • your partner’s hours of current work increase to 24 per week

This is called the Mortgage Interest Run On. Find out if you qualify at the following nidirect page.

Help and advice

For SMI queries and to check your eligibility, contact your local Social Security /Jobs & Benefits office, Employment and Support Allowance Centre or the Northern Ireland Pension Centre.

Free advice is also available from:

Share this page

Feedback

Would you like to leave feedback about this page? Send us your feedback