Less claim SMI since government changes

Michael Lloyd

September 9, 2019

Less people are claiming the government’s Support for Mortgage Interest (SMI) since its replacement with a loan, Royal London has found.

A Freedom of Information (FOI) request revealed that 1,030 homeowners made new claims for SMI between April 2018 and July 2019 which is less than a third of a total 3,580 who became eligible for support during the period.

Royal London argued this shows the extent to which use of this benefit has ‘crumbled’ since the government introduced changes to the scheme in April 2018.

Becky O’Connor, personal finance specialist at Royal London, said: “In less than two years, the government has effectively dismantled part of the welfare state.

“The low interest rate environment may mean that the government has been able to make the changes without too much short term impact but without this support any kind of strain on mortgage affordability, from losing a job or going off sick, may mean that thousands of homeowners find themselves on the fast track to repossession.”

Around 18 months ago, 100,000 unemployed, sick or elderly homeowners were getting help towards their mortgage interest costs from the government.

The most recent official figures showed this had fallen to 20,000 following the introduction of the changes.

Before April last year, SMI was paid as a free benefit covering the interest on mortgages for those claiming benefits such as pensions credit, income support and universal credit.

After April 2018, the government introduced a rule that the benefit would be paid as a loan and would need to be repaid when the property was sold or transferred into new ownership, including for existing claimants.

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