SMI loans can help pay mortgage interest for those on benefits, but repayment is due when the home is sold.
Support for Mortgage Interest (SMI) is a government-backed loan provided by the Department for Work and Pensions (DWP) designed to assist homeowners receiving certain benefits in covering the interest on their mortgage or home loans. The loan is intended solely to help with interest payments on a qualifying mortgage or home loan, and repayment is typically not required until the property is sold, or ownership is transferred.
Interest on the loan is charged monthly using compound interest which means that the total amount owed will increase over time. Despite this, the SMI loan may still be a more affordable alternative compared to borrowing from banks or credit unions.
Before applying, individuals are advised to assess their financial situation. SMI may not cover the full mortgage payment and so applicants may still need to pay the remaining balance. Those who have missed payments, are managing other debts, or share ownership with someone not included in their benefit claim should seek professional advice prior to applying.
Eligible applicants may borrow against up to £200,000 of their mortgage if they receive working-age benefits, or £100,000 if they are on Pension Credit, this can increase to £200,000 in certain transitional cases. For joint mortgages, entitlement may be limited. There is no credit check for the SMI loan, so applying will not affect benefits or credit scores.
To apply, individuals must complete an SMI application form. However, it is recommended that they explore all available options first, including discussions with their mortgage lender and support services such as Citizens Advice.
