UC and buying a house

Bridget76

Has anyone ever been in receipt of UC, bought a house and then gone onto to claim govt help with the interest immediately? Smi I think it's called.I work 30hrs a week but I'm a long term claimant of UC. 

tacpot12

There is a three-month waiting period before you can receive SMI, but this applies to when you start to claim UC. As a long-term claimant, you should be able to apply for SMI and receive it immediately. 

The only issue you might have is where the money has come from to allow you to buy a house. Providing you have this money in line with the rules for UC, you can buy a home and receive SMI immediately. Do bear in mind that it is a lone, and you will have to pay the capital repayments on the property, and the loan will be recovered when you sell the house. 

There is lots of good information on SMI here: Deciding if you should apply for SMI - Citizens Advice

DE_612183

where does your deposit come from to buy your house?

Bridget76

Thanks for that. Deposit is coming from a family member and house to be paid with mortgage/loan. We are a lower income family but I think this is a way of us getting out of the rental trap. I don't know if we'll need smi forever, but it could help a lot for now. Especially as you only pay it back when you sell the house, but I'm not wanting to buy to move up the property ladder. I just want a permanent home.

TELLIT01

The subject of buying a property when only/main income is benefits is raised quite regularly.  Are you sure you would be able to afford the upkeep of a property along with a mortgage at this time?  The theory of owning your own home sounds great, but does need careful consideration.  Apologies if you have already thought the situation through in detail.

Bridget76

Yes given it a huge amount of thought. Now or never really. 

peteuk

SMI is a loan and you’ll need to pay it back plus interest (currently 4.1%). When you sell the property. 

Rubyroobs

peteuk said:

SMI is a loan and you’ll need to pay it back plus interest (currently 4.1%). When you sell the property. 

Surely it would be a ridiculous idea for someone in op's position to do this then unless they were confident house prices were going to rise. What happens if you owe more than the house equity when you come to sell? I actually can't believe someone can be allowed to purchase a house knowing the government will need to pay SMI. It's different is someone already has a mortgage and falls on hard times and their situation changes.

HillStreetBlues

Rubyroobs said:

peteuk said:

SMI is a loan and you’ll need to pay it back plus interest (currently 4.1%). When you sell the property. 

Surely it would be a ridiculous idea for someone in op's position to do this then unless they were confident house prices were going to rise. What happens if you owe more than the house equity when you come to sell? I actually can't believe someone can be allowed to purchase a house knowing the government will need to pay SMI. It's different is someone already has a mortgage and falls on hard times and their situation changes.

If OP rented any HE would be gone forever, with the SMI it needs to be repaid (if equity).

born_again

Bridget76 said:

Has anyone ever been in receipt of UC, bought a house and then gone onto to claim govt help with the interest immediately? Smi I think it's called.I work 30hrs a week but I'm a long term claimant of UC. 

What's the value of the loan?

https://www.gov.uk/support-for-mortgage-interest/what-youll-get

8dayweek

Whilst I’m not sure your lender can refuse your application for SMI, they may change the tariff / product you’re on. 

No idea whether that’s correct or not, but anecdotally I’ve had people rescind their SMI application for that reason