Deciding if you should apply for SMI

Support for mortgage interest (SMI) is a loan from the Department of Work and Pensions (DWP) to help pay towards the interest on your mortgage or another home loan.

You might get SMI if you own your home or you’re in a shared ownership scheme.

You need to be getting one of these benefits:

• income-based Jobseeker’s Allowance (JSA)

• income-related Employment and Support Allowance (ESA)

• Income Support

• Universal Credit

• Pension Credit

The DWP will charge interest on the SMI loan - this means you’ll pay back more than you borrowed. Even though you’ll pay interest, it could be cheaper than other ways of borrowing money.

You’ll need to pay back the loan, but usually only when you sell your home or give it to someone else. For example, you might give the home to a family member even if you still live there.

You won’t have to pay back any money you get in your benefit payments to help with other housing costs like service charges.

Check if you can get SMI for your loan

SMI can help to pay the interest payments for a:

• mortgage for the home you live in

• loan to help you buy more of your home

• loan to help with other costs like legal fees and stamp duty

• loan to pay off your mortgage

• alternative finance arrangement like an Islamic mortgage - if you get Universal Credit or Pension Credit

You might also get help with other loans for service charges or repairs.

SMI can only help pay your interest payments. It won't pay off the capital of your mortgage.

When your SMI payments will start

If you get JSA, ESA or Income Support, you can usually get SMI starting from 39 weeks (about 9 months) after you claimed JSA, ESA or Income Support.

If you get Universal Credit, you can usually get SMI starting from 3 months after you claimed Universal Credit.

The time before your SMI starts is called the ‘waiting period’.

If you’ll struggle to pay your mortgage until your SMI starts, check what help you can get with your other living costs or ask your nearest Citizens Advice if you can get an SMI loan earlier.

If you get Pension Credit, your SMI payments will start straight away.

Check if you need to get advice

There are some situations where you should get advice first - check if you need advice before you apply for SMI.

Compare SMI with other options

You’ll need to decide whether you want to accept an SMI loan or find another way to pay your mortgage. It’s important to make sure you keep making the payments so you don’t lose your home.

Compare the different ways you could pay the mortgage, like getting a loan from somewhere else or changing your mortgage payments. For each option, find out:

• how much money you’ll get

• how much interest you’ll pay

• when you’ll have to pay it back

• if it will affect your benefits or credit score

If you’re thinking of borrowing money from friends or family, you should also think about what might happen if you can’t pay it back - for example if they might stop helping you with other things, like childcare.

You can ask your nearest Citizens Advice to help you understand your options. They can’t tell you which option you should choose. If you want someone to help you decide what to do, you can find a financial adviser - you’ll have to pay for their help.

How much SMI you can get

If you get JSA, ESA, Income Support or Universal Credit, the DWP will usually pay the interest on up to £200,000 of your mortgage.

If you get Pension Credit, the DWP will usually pay the interest on up to £100,000 of your mortgage. They’ll pay interest on up to £200,000 if your Pension Credit started within 12 weeks after you stopped getting JSA, ESA, Income Support or Universal Credit.

If you own the home with someone else, you might only get interest for your share of the mortgage. For example, if you have a mortgage of £200,000 with your ex-partner, the DWP might say your share of the mortgage is half the total amount - £100,000.

Once the DWP have worked out how much of your mortgage they can pay the interest on, they’ll pay it straight to your mortgage lender. You can check how much interest the DWP pays on GOV.UK.

The DWP might take some money off your payments if you get money from:

• work

• a mortgage protection policy

• something else, like a lodger

If you get JSA, ESA, Income Support or Pension Credit, the DWP might also reduce your payments if you live with another adult who could pay you rent - for example a flatmate or a grown-up son or daughter.

If the loan doesn’t cover your mortgage payments, you’ll need to pay the extra money yourself. Check if you can cut down your mortgage costs if you can’t afford the payments.

How much interest you’ll pay

You can check how much interest you'll pay on the SMI loan on GOV.UK. The rate can go up or down.

Even though you’ll pay interest, it could be cheaper than other ways of borrowing money. For example, you might pay more interest if you get a loan from somewhere else like a bank or credit union - or if you change your mortgage payments. If a friend or family member gets a loan for you, they might pay more interest on their loan too.

You can find out more about comparing how much loans will cost before you decide what to do.

When you’ll have to pay it back

If you get a loan from somewhere else, you’ll usually need to pay it back sooner than an SMI loan.

You’ll usually only have to pay back the SMI loan when you sell your home or give it to someone else. The DWP will take the money for the loan after your mortgage has been paid. You can’t use the money for anything else until your mortgage and SMI loan have been paid.

You might need to pay the SMI loan back earlier if you go bankrupt or make another formal agreement to pay other debts you have - like an individual voluntary arrangement (IVA).

If your partner lives in your home and will inherit it when you die, they won’t have to pay the loan back straight away - it can be paid after they die. If anyone else inherits your home, they’ll have to pay back the SMI loan first.

If there isn’t enough money left to pay the SMI loan back after your mortgage has been paid, the DWP will cancel the rest of the debt. They’ll only ask for more money if:

• they think you deliberately sold your home cheaply

• you gave your home to someone else instead of selling it

If this happens, the DWP will work out how much money you’d have got from selling your house on the open market - for example through an estate agent. They’ll use that amount to decide how much SMI you could have paid back after you’d paid your mortgage.

You can pay back an SMI loan early - but it’s important to check how paying it back will affect your other loans. You should also check how it will affect your benefits.

How it will affect your benefits or credit score

There’s no credit check for the SMI loan, and it won’t affect your benefits or credit score.

If you get a loan from somewhere else like a bank or a family member, it might affect your benefits if they give you all the money in one payment. This could happen if your savings after you get the loan are more than:

• £6,000 - if you get JSA, ESA, Income Support or Universal Credit

• £10,000 - if you get Pension Credit

You can usually use your savings to pay your mortgage interest. Contact your nearest Citizens Advice if you’re thinking of using your savings to pay more than your usual monthly payments - this could affect your benefits.

If you decide to apply for SMI

You’ll need to fill in an SMI application form - find out how to apply for SMI.