SMI rate

ClaireP1977

Is this constructive?

housebuyer143

sammyjammy said:

https://forums.moneysavingexpert.com/discussion/6404490/support-for-mortgage-interest

It doesn't answer this question at all.

OhWow

housebuyer143 said:

ClaireP1977 said:

Hiya, yes it is currently but changing in Jan-23

"The current rate of interest is 3.03 per cent from 1 January 2023. This rate can go up or down but it won't change more than twice a year and you will be told if it's going to change."

Given that there has been such a significant change in the BofE base rate since the 2.09% that was set in Apr-21 - does anyone know if this will be increasing?

Hang on.. how can they charge you 3% but only give 2% as the support payments? 

It seems like potentially they are due to increase it then at the same time, otherwise that's really messed up. 

The governrnent has been paying 2.09% but only charged 1.4%. Are the interest payments the claimant is charged, based on what the government can borrow that money for?

There is also this-

"The interest rate used to calculate how much SMI you will get is currently 2.09 per cent. If you have a lower interest rate than this, you will receive more SMI than is needed to meet your payments. These payments can only be credited to your mortgage account."

https://www.nidirect.gov.uk/articles/support-mortgage-interest

If you have been getting the overpayments in previous years before your rate recently became over  2.09%, can you speak to your mortgage lender about using some of the overpayments to reduce your present arrears?

OhWow

If you aren't already, you could go over to the https://forums.moneysavingexpert.com/categories/debt-free-wannabe board for lots of help on cost cutting ideas.

There is an oldstyle board somewhere on here, that might also be useful to you.

Michelle_A

Hi I have been really worried about this and tried desperately to get answers as to why DWP had not increased the interest rate for payments, after 9 consecutive rises from the BOE.
I was advised that SMI  would be the same as the previous benefit, so they would use a standard mortgage rate, once that hit 0.5% higher than they were paying they would increase the interest rate for payments.
This should have triggered a rise in July.
I finally after months of trying spoke to someone at SMI today and I was so shocked to be told, DWP has currently not got any plans to raise the payment interest rate, I asked how they could be doing this when it's actually explained payments are meant to go up with a rise in interest rate, and she almost admitted she had no idea why DWP had not sorted this by now!!
I explained thousands of people on standard variable rates have had huge increases in their mortgage payments and are relying on SMI payments but she just said she couldn't help, and there were no plans to increase payments.
Surely there is a case against this ad this is not how it is meant to work?

housebuyer143

Michelle_A said:

Hi I have been really worried about this and tried desperately to get answers as to why DWP had not increased the interest rate for payments, after 9 consecutive rises from the BOE.
I was advised that SMI  would be the same as the previous benefit, so they would use a standard mortgage rate, once that hit 0.5% higher than they were paying they would increase the interest rate for payments.
This should have triggered a rise in July.
I finally after months of trying spoke to someone at SMI today and I was so shocked to be told, DWP has currently not got any plans to raise the payment interest rate, I asked how they could be doing this when it's actually explained payments are meant to go up with a rise in interest rate, and she almost admitted she had no idea why DWP had not sorted this by now!!
I explained thousands of people on standard variable rates have had huge increases in their mortgage payments and are relying on SMI payments but she just said she couldn't help, and there were no plans to increase payments.
Surely there is a case against this ad this is not how it is meant to work?

I guess the government don't want to spend or don't have the money to double the payouts for smi however this is very shortsighted and will end up with people selling up, moving into rented and claiming housing benefit which is arguably worse as they will never get the money back 

Tulip99

Michelle_A said:

Hi I have been really worried about this and tried desperately to get answers as to why DWP had not increased the interest rate for payments, after 9 consecutive rises from the BOE.
I was advised that SMI  would be the same as the previous benefit, so they would use a standard mortgage rate, once that hit 0.5% higher than they were paying they would increase the interest rate for payments.
This should have triggered a rise in July.
I finally after months of trying spoke to someone at SMI today and I was so shocked to be told, DWP has currently not got any plans to raise the payment interest rate, I asked how they could be doing this when it's actually explained payments are meant to go up with a rise in interest rate, and she almost admitted she had no idea why DWP had not sorted this by now!!
I explained thousands of people on standard variable rates have had huge increases in their mortgage payments and are relying on SMI payments but she just said she couldn't help, and there were no plans to increase payments.
Surely there is a case against this ad this is not how it is meant to work?

OMG, I too have been trying to find out about the rise and I am so shocked to see what DWP have said to you!!! Even though I am classed as a vulnerable adult my mortgage company has put me under extreme pressure. Strange that DWP wrote to my lender a month ago to ask for how much I have outstanding and the interest I had been charged each month for the last year??!!
My mortgage payments have gone from £350 to £874 monthly and this is before they add another.5% rise. I receive £222 4weekly towards my SMI LOAN!! Where on earth am I supposed to find £600+ monthly when I’m only receiving disability benefits? This together with the energy ridiculous rises would take all my income.
I don’t know whether Martin Lewis is aware of the unbelievable way DWP calculate how much they contribute towards the LOAN but I really hope that somebody from way up high would look at our position, I think there’s only about 35k of us that have an SMI loan so not getting my hopes up. 

Looks like repossession imminent.
Anyway thanks Michelle I don’t feel so alone now and I hope you have a wonderful Christmas x

silvercar

I think SMI is only intended as a partial solution to a temporary problem. It was never designed as a benefit parallel to say the housing element of universal credit. 

It was also designed as a standard calculation to avoid having to investigate every claimants individual mortgage situation, so everyone gets the same rate, even though some will be on lower fixed rates and some higher variables.

housebuyer143

silvercar said:

I think SMI is only intended as a partial solution to a temporary problem. It was never designed as a benefit parallel to say the housing element of universal credit. 

It was also designed as a standard calculation to avoid having to investigate every claimants individual mortgage situation, so everyone gets the same rate, even though some will be on lower fixed rates and some higher variables.

If course, but when the rate being provided is significantly below average it's not really fit for the people it's supposed to be helping.

Soon enough they will be paying 3% interest on a loan paid to them at 2%. Talk about taking advantage of people in a bad situation. If they are not going to update to allowance they should not be increasing the repayments.

silvercar

housebuyer143 said:

Esilvercar said:

I think SMI is only intended as a partial solution to a temporary problem. It was never designed as a benefit parallel to say the housing element of universal credit. 

It was also designed as a standard calculation to avoid having to investigate every claimants individual mortgage situation, so everyone gets the same rate, even though some will be on lower fixed rates and some higher variables.

If course, but when the rate being provided is significantly below average it's not really fit for the people it's supposed to be helping.

Soon enough they will be paying 3% interest on a loan paid to them at 2%. Talk about taking advantage of people in a bad situation. If they are not going to update to allowance they should not be increasing the repayments.

To be fair, that the interest charged is more than the help given is a separate issue and similar to a mortgage lender charging a higher rate for those borrowing than it gives to savers.

it is supposed to be some help to those struggling, it isn’t a full solution. sadly for those without income in the long term the home owning desire isn’t going to be met by SMI. For those whose lack of earned income is a temporary blip, this is designed to help. It should stave off demands from a lender until people can get back on their feet.