Support for Mortgage Interest (SMI) has changed from a benefit to a loan and those in receipt of it must apply if they want to receive the loan otherwise payments will stop.
Although the take up of the loan has been slow, the Department for Work and Pensions (DWP) says that people can change their mind even after SMI payments have been stopped.
Of those who have been contacted by telephone, 18,000 people have accepted or intend to accept a loan and 12,000 are undecided. They have to be given a loan offer over the phone, and these undecided people have up to six weeks to make a decision.
Everyone else will have until the regulation period runs out or until six weeks after the DWP has made them a loan offer.
Although 42,000 people have declined the loan, they can change their mind at a later date and the DWP will backdate the loan to 6 April 2018. A further 31,000 people have been sent letters but have not yet been able to speak on the phone.
What should SMI recipients do?
If you receive SMI benefit and don’t sign up for a loan, your payments will stop. This could be on 7 May but depends on whether you have had any contact about the loan.
You should have received a letter from the DWP explaining the changes. If you don’t have the letter, ring 0800 169 0310 if you’re of working age or 0800 731 0469 if you’re over state pension age.
A company called Serco is working on behalf of the DWP who will ring you to talk through your options. If you have not had that call, ring them on 0800 046 8333 to book an appointment for a call to discuss your options.
If you want to take the loan, you will be sent a loan agreement form, which you must check and sign within six weeks of receiving it.
Vulnerable people who can’t make financial decisions by themselves due to, for example, dementia or a learning disability, will have a little longer to sort things out.
DWP comment
A DWP spokesperson said: “Over time, someone’s house is likely to increase in value, so it’s reasonable that anyone who has received financial help towards their mortgage should be asked to pay that back.
“People who sign up to the loan will continue to get help with their mortgage interest and it is only repayable if there is available equity when the property is sold.
“If people decide to decline the loan now but change their mind in future the loan can be backdated so in effect there would be no break in payments.
“We have already contacted everyone currently in receipt of SMI to explain the change but we are making sure people have time to review the documents, obtain advice and consider their options.”
What is SMI?
Support for Mortgage Interest (SMI) is paid to people who are receiving benefits and pays some or all of the interest on their mortgage (only the interest not the full repayment mortgage).
The maximum mortgage is £200,000 – or £100,000 if you receive pension credit or began receiving benefits before 2009.
The interest rate is 2.61%, and if your interest is higher than that, SMI will only pay the first 2.61%.
Hi, wondered if you could kindly clarify a couple of points please. I’m receiving esa, work related and received the smi benefit. When they introduced this new rule for smi in April 2018, I did not take the loan, so my payments stopped. I borrowed money to pay the monthly interest on the mortgage.
Q: can I apply for smi and have it backdated to April
Q: if it is backdated, will they refund the amount I’ve paid from April to date of application as I’m currently not in mortgage arrears due to borrowing to pay it
Q: if they do refund, will they place it as a credit to mortgage, or will it be sent to me personally.
Q: is smi free from interest
Thank-you in anticipation of your response
Yes you can apply for SMI and it will be backdated to April. Best to ring Serco, the company working on behalf of the DWP, who will be able to explain your options. The phone number is 0800 046 8333
Hi did you get an answer to your question as I have just taken out the loan and I’m also wondering who will receive the backdated payments .