MSE News: Mortgage support scheme (SMI) changes kick in

MSE_Kit

An extra 200,000 homeowners on universal credit are now eligible for state help with their mortgage repayments as changes to the 'support for mortgage interest' scheme have kicked in today (3 April). It means you might be able to get help covering a portion of your monthly mortgage repayments if you're struggling. 

Read the full story:

'On universal credit and struggling to pay your mortgage? Check if you can get help with the interest as Government scheme is expanded'

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[Deleted User]

So if your income is so low you cannot afford the interest payments on your mortgage the government will lend you some money at interest secured on your home to do so. Is not lending people money at interest to make interest payments on loans the sort of thing pay day lenders got into trouble for. As the borrower is obviously unable to pay back the debt and interest is compounding. 

NedS

Deleted_User said:

So if your income is so low you cannot afford the interest payments on your mortgage the government will lend you some money at interest secured on your home to do so. Is not lending people money at interest to make interest payments on loans the sort of thing pay day lenders got into trouble for. As the borrower is obviously unable to pay back the debt and interest is compounding. 

I agree the scheme is far from ideal. However, the intention is to try to support people who may have lost their job and allow them to stay in their homes rather than face repossession and homelessness until they are able to secure another job and continue paying their mortgage. It just might give some people some valuable breathing room. No one has to accept the offer of help - everyone is free to make their own choices, but I'm guessing there will be a lot of people who are very over-leveraged if a recession and subsequent job losses follow on from the large rises in interest rates we have seen. Having lots of debt and an insecure job is not a great place to be right now.

[Deleted User]

Support for Mortgage Interest SMI does not stop many people who lose their job from losing their homes. It leaves far too much of the mortgage payment to pay. What SMI will now help is working people on Universal Credit. 

SMI provides no help towards the capital payment, and the help towards the interest payment is based on the interest rate being 2.09%. To get SMI the mortgage must be £200,000 or less (£100,000 if eligible via pension credit). And SMI is a loan at variable interest (currently 3.03%) secured on the home, repaid along with the compounded interest on claimant death or if the home ownership is transferred to someone else.