You would like to buy a house, but you cannot pay the mortgage, or
you claim certain benefits? Then you may be able to get help from the
government to pay interest on your mortgage via the Support for Mortgage
Interest (SMI). Here is some advice on what this is and what you need to know
when you apply.
What is Support for Mortgage Interest (SMI)?
Support for Mortgage Interest (SMI) is a loan that you can use to pay the interest on your
mortgage or home renovation loan. Usually, you only have to pay back this loan
whenever you sell your property or when you transfer it to someone else, for
example your children. Of course, you can also pay it back whenever you have
enough capital so that you get it out of the way.
Who qualifies for SMI?
Support for Mortgage Interest is a loan from the Department of
Work and Pensions (DWP) that can be used to pay interest on a mortgage or other
housing loan. You can get SMI if you own a home or are in a shared ownership
You may also need to fall under one or more of the following
Income-based Jobseeker’s Allowance (JSA)
Income-related Employment and Support Allowance (ESA)
DWP chargesinterest on an SMI loan – this means you pay back more than you borrowed. Even if you pay
interest, it can be cheaper than other ways to borrow money. You will have to
pay back the loan, but usually only if you sell the house or give it to someone
You do not have to pay back any money you receive to pay benefits
to cover other housing costs, such as service charges.
How much you will receive
If you apply for SMI, you might be able to get up to £200,000 mortgage. It can be up to £100,000 if you are already getting a loan for
retirement. The DWP uses a standard interest rate to calculate how much of a
loan you are able to get. This rate can differ from the actual mortgage rate
you might receive from somewhere else as the government interest rate can
The current standard interest rate is 2.61%. While this rate may increase or decrease, it does not
change more than twice a year, and you will be notified if and when a change is
If selling your home is not enough to pay off the SMI loan entirely,
the rest of the loan is written off and you don’t have to pay it back.
Mortgage providers can offer several ways to pay off your
mortgage, for example, an extension of the mortgage payment date. You may also
be able to change your mortgage to get a better interest rate. However, before
seeking a mortgage to pay any loan or debt, be sure you understand thecommon mortgage jargon so that you know exactly what you are getting into.
If you have family members or friends who have a good income, you
can ask them to borrow money to pay back the SMI loan. This can be a good
option if the person you borrowed money from does not charge interest.
But you should always think carefully before borrowing from family
or friends and make sure you can pay back the money borrowed on time so that
you don’t damage your relationship with that person.
Before you decide if an SMI loan is the best option for you and your household, you should seek professional advice,
especially if you own a property with someone who is not your partner.
Although buying a house is currently on top of your list, you
should always check if it doesn’t bring you into financial trouble. If so, it
might be worth waiting a little while longer before applying for SMI.