Support for Mortgage Interest (SMI)

To get Support for Mortgage Interest, you must be out of work or of State Pension age, and get:

• Universal Credit
• Income Support
• income-based Jobseeker’s Allowance
• income-related Employment and Support Allowance, or
• Pension Credit.

If you’re on Universal Credit, there is a waiting period of three assessment periods (about three months) before you can get your first SMI payment.  

If you’re on other working age benefits there’s a three month waiting period from the time you claim SMI until your first payment is made.

If you’re getting Pension Credit, you can get help immediately.

Your SMI claim can be backdated until the date you first became eligible for it, so it is worth doing a benefits check or seeking specialist benefits advice if you’re not sure.

If you have adults living with you who don’t pay rent, it might reduce how big your SMI loan can be. This excludes your partner, but might include grown-up children.

To work out how much SMI you might be entitled to if you live with any other adults, use our free Benefits Calculator

• There are no fees to set up the loan.
• You don’t have to get a credit check to get the loan and taking it won’t usually affect your credit rating.
• SMI is usually cheaper than other credit options because interest charges are low.
• It is more flexible than a normal loan as you don’t have to make regular repayments – unless you want to.
• Interest will be added to the total amount you owe, until the loan is paid back or written off.
• You won’t get a loan automatically – you have to choose to take one out.
• The SMI payment is usually made directly to your mortgage lender.
• SMI can be backdated to the date that you became eligible to claim it without any restrictions.
• The loan is secured against your home. When you sell your home or transfer the ownership of it to someone else, you must pay back the loan out of any equity left over when your mortgage is repaid.

You can also get SMI to help pay the interest of a loan you’ve taken out to cover:

• Essential repairs or improvements to your home. For example insulation, repairing dangerous faults or adapting your home if someone in your household is ill or disabled.
• Buying your ex-partner’s share in your home if you have separated.

There’s no limit to how long you can claim SMI for.

If you’re getting an SMI loan and you want to move home, or the ownership of your property is transferred, you’ll need to repay the SMI loan with interest.

However if you don’t want to do that you can also transfer your SMI loan to another property.

As the help you’ve received is now a loan, you will be charged interest. The longer you get help, the more interest you’ll be charged. This is calculated daily and can change. However it can’t change more than twice in any year. 

The interest rate is currently 3.03% (from 01 January 2023).

Interest will be added to your SMI loan each month which might go up or down.

The interest charged is ‘compound’. This means each month’s interest will be included in the total ‘balance’ to calculate the next month’s interest.

You can choose to pay back the loan at any time. For example, if you find paid work and can afford to make repayments. Usually, the minimum amount you can repay each time is £100.

The loan will usually have to be repaid when you die, sell your home or transfer ownership.

You’ll also have to repay the loan if you move home and can’t transfer the loan to the new property.

If you die and your house passes to your spouse or civil partner, the loan can be paid back when they die instead.

The Department for Work and Pensions (DWP) will claim back the amount of loan you owe from the money in your estate from the sale of your home.

When your home is sold, if there isn’t enough money left over after your mortgage is repaid (equity) to pay back the SMI loan, the remaining amount will be written off. And the DWP will consider the loan to be fully repaid.

If you’re having problems with making your mortgage repayments, contact your lender to find out what support they can offer. This could include a short payment ‘holiday’ or deferral to help you get over a temporary crisis or an extension of the term of your mortgage.

You could also look into options you might have to switch mortgages to get a better interest rate.

How much you have in savings will affect the benefits you’re getting to qualify for SMI. So, you must have less than £16,000 in savings or investments – or £10,000 if you’re getting Pension Credit).

Do you have between £6,000 and £16,000 in savings or investments? Or between £6,000 and £10,000 if you’re getting Pension Credit? Then the amount of benefit you’re getting now might be reduced.

If you use any savings to pay off your SMI loan, the amount you get in benefits might increase – if your savings fall below £6,000.

If you have family members or friends who have their own income, you might want to ask them to lend you the money to pay back your SMI loan.

This could be a good option if the person you’ve borrowed the money from doesn’t charge you interest.

But always think carefully before you borrow from family or friends. And be sure you can pay back what you’ve borrowed within an agreed timeframe. If you can’t, it could affect your relationship with that person.

You could ask a credit union, bank or building society for a loan. You could then use this to pay back your SMI loan.

A credit union, bank or building society loan won’t be secured against your home. So your home isn’t at risk if you can’t keep up with repayments.

Bear in mind, you would need to have a credit check. And a loan from a credit union, bank or building society is likely to have a higher rate of interest than the SMI loan.

You could sell your home and buy a cheaper house. This would mean you could have a smaller mortgage – or you might not need to have a mortgage at all.

Remember to factor in the other costs of moving house, such as Stamp Duty, legal fees and removal costs.

Before you decide whether an SMI loan is the best option for you and your household, it’s a good idea to get advice.

You can also get housing advice from these organisations: 

• Citizens Advice
• Shelter
• If you live in Northern Ireland, Housing Advice NI

Find out more about making a new claim for SMI on the GOV.UK website