If you have a mortgage and receive certain benefits, you may be able to get help with the interest on your mortgage or on loans you’ve taken out for specific repairs or improvements to your home. This help is called Support for Mortgage Interest (SMI). As a Mortgage Broker I know all about it, so lets get in to it.
Who Can Get It
You may qualify if:
- You own and live in the property
- You have a mortgage or qualifying home improvement loan
- You receive one of these benefits: Income Support, income‑based JSA, income‑related ESA, Universal Credit, or Pension Credit
Waiting times before payments start depend on the benefit , for example, Pension Credit can trigger payments immediately, while Universal Credit usually requires three months of continuous payments.
What You May Get
- Covers interest only, not the capital, arrears, or insurance
- Usually up to £200,000 of your mortgage or loan
- Limit is £100,000 if you’re on Pension Credit or certain long‑term claims from before January 2009
- Calculated using a standard interest rate set by the government, not your current interest rate
- Paid directly to your lender
So for instance if you £150,000, SMI at 3.66% would provide £5,490 a year (about £457 a month).
How to Apply
- Linked to your benefit claim, you’ll be asked about housing costs when applying for a qualifying benefit
- If you proceed, you’ll complete and sign an SMI loan form at no cost
Beforehand, gather:
- Your outstanding mortgage/loan balance
- Your current interest rate
- Your partner’s agreement to sign (if applicable)
- Send the form to your lender; they’ll complete their part and forward it to the benefit office
- If approved, you’ll receive a loan offer, you can accept immediately or later, and payments can be backdated to when you first qualified
How It’s Repaid
- Repaid in full with interest when you sell or transfer ownership, unless moved to another property
- Interest is added annually until cleared or written off
- Voluntary repayments allowed with a minimum of £100 or the full balance if less
- If sale proceeds don’t cover the full loan, you repay what you can, and the rest is written off
For example, if you:
Sell for £180,000, after paying your mortgage and other secured loans, you have £20,000 left. If your SMI loan is £5,000, it’s repaid from that amount.
Key Takeaways
- SMI helps with mortgage or home improvement loan interest if you’re on certain benefits
- It takes the form of a government loan, not a grant, repayable with interest when you sell or transfer your home
- Usually up to £200,000 or £100,000 in some cases
- Payments based on a set government interest rate, not your lender’s
- Payment goes directly to your lender; start dates vary by benefit