Support for Mortgage Interest (SMI) awarded, but...

the_tired_one

Hi. Just posting this for a neighbour of mine who I helped apply for the above assistance.

He recently received a letter to confirm that the SMI had been awarded and would be backdated approx 6 months, and that all payments would be made directly to the Mortgage Lender.

However, for 6 months, he actually paid the interest, which went to the Mortgage lender, so shouldn't he get that interest payment refunded back to him....or is he missing something here?

I dont know much about the scheme and just helped them complete the forms.

He understands that from now all payments will be made by DWP will be made to his Building Soc but if DWP have awarded & backdated the SMI by 6 months, shouldn't he get back what he paid. It appears the Building Soc are getting 2 lots of interest payments for 6 months.

Thanks

TELLIT01

Yes that money should come back to your neighbour, but as skcollobcat10 says, if they can manage without it it will reduce the outstanding mortgage a little.

lemontart

similar happened to me, just let it be and it reduced the capital amount of loan. So in long run did me a favor.

Bogalot

It is up to the lender whether the overpayment is returned to the customer or not, the customer is not automatically entitled to it back. Any overpayment not returned will be either applied against the capital owed, or as a reserve to allow a payment holiday in the future. The lender will have a policy on this.

the_tired_one

Thanks to all those that replied - the responses make sense.

Can I ask, if my neighbour would like to have those payments back, can he request this, or is it not up to him?

Again, many thanks!

anmarj

He can ask, but as bogalot stated it is up to the lender if he gets the money back.

sammyjammy

SMI is paid at a set interest rate so your neighbour needs to make sure that the amount paid actually covers his interest due.

rockingbilly

TELLIT01 wrote: »

Yes that money should come back to your neighbour, but as skcollobcat10 says, if they can manage without it it will reduce the outstanding mortgage a little.

......and thus reduce the amount of money that the DWP have to pay out in the future...umm

as a warning to others, a friend paid their mortgage for months before everything was sorted. In that time his payments were made from his credit card. He didn't receive any of this overpayment back and ended up paying a fortune in interest charges trying to clear his credit card debt.

rockingbilly

Bogalot wrote: »

Any overpayment not returned will be either applied against the capital owed, or as a reserve to allow a payment holiday in the future. The lender will have a policy on this.

It should be held as a reserve but unfortunately I have never heard of that happening. I paid my mortgage off by over paying it to the tune of an extra £500 a month. When I got the statement it showed that the bank had reduced the debt and therefore it was not available as a fund to cover any future underpayments.

the_tired_one

anmarj wrote: »

He can ask, but as bogalot stated it is up to the lender if he gets the money back.

Who should he contact? DWP or his Building Society?

Bogalot

the_tired_one wrote: »

Who should he contact? DWP or his Building Society?

The building society.