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The plan to change support for mortgage interest (SMI) payments from a benefit to a loan will hit current SMI claimants, the DWP have confirmed in an impact assessment published yesterday.

SMI pays all or part of the interest on a claimant's mortgage if they are getting benefits such as Income Support, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, Pension Credit or Universal Credit.

At present SMI is a non-repayable benefit. But one of the measures in the Welfare Reform and Work Bill currently going through parliament is to change the payments into a loan from 2018, which will be repaid when a claimant returns to work or sells their property. Alternatively it will be recovered from their estate after they die.

Not only will the loan have to be repaid, but interest will be charged on it and there will be an administration charge on top. The changes will affect both current claimants and new claimants from 2018.

The DWP claim that the change will increase claimants’ life chances and reduce repossessions.

You can download the full impact assessment from this link.


#9 Neal55 2017-06-03 21:02
This will be a nightmare for me, if I keep my "HOME" I will owe £56,000 plus interest and the admin fee at the time my mortgage ends. My equity wont cover it maybe £30,000 at the end of term. Nothing to show and Ive worked most of my life. Who decides how much my property is worth? Angry owners could sell for £10 lol.
+1 #8 DJ 2015-07-30 17:18
I don't feel this SMI loan is fair and it appears to be saying that we should all live in rented homes because we do not deserve to have our own home. I'm worried by this,- my home has decreased in value and I am still in negative equity, so am not going to be 'minted' in the event I sell up.
I agree the whole idea is unfair and ridiculous but you won't be required to repay the SMI you've received before the change in 2018 and I understand that if there is insufficient value in the home to repay the loan when the home is sold, the loan will be written off, so I hope that reassures you a bit.

It still means it will be very difficult to sell in the future and afford to buy another home, so people will either be stuck where they are or end up having to rent and claiming HB.
#7 plankgirl 2015-07-30 16:11
I claim SMI for interest payments, which is about half of what I would claim in housing benefit if I rented, therefore actually saving the DWP money.

Mortgage interest is paid to the banks, and does not contribute to value of a home. It seems to me that those who have worked all their life and have been unfortunate to become ill and disabled are being discriminated against. Maybe if I had never done the right thing, working and buying my own home and paid rent to someone else who has the money to buy properties to rent. ( the rich getting richer) I would be ok.
I do agree that reform is needed, but if SMI is to be a loan, why not housing benefit ( which is paid to someone who likely uses that income to pay the morgage etc on the properties they rent out )?

I don't feel that, as a mortgage payer, I will actually benefit from this when I sell my home - which I may have to if this actually happens. In such case, I will need to rent and claim housing benefit ( which currently would be twice as much as the SMI ) to pay a landlords morgage.

I don't feel this SMI loan is fair and it appears to be saying that we should all live in rented homes because we do not deserve to have our own home. I'm worried by this,- my home has decreased in value and I am still in negative equity, so am not going to be 'minted' in the event I sell up.

Maybe they should change the system so that those of us who have struggled to own our home get the same payment level as those on HB ........oh yeah, silly idea as that would cost the state more !

Guess I'd better start looking to rent somewhere, at least I can sleep easy knowing the landlords of the country will be ok ; )
+3 #6 DJ 2015-07-24 16:25
I wouldn't really have a problem with them recovering it when the owner dies but to recover it when someone sells their property could leave that person without enough money to buy another home, even in a cheaper area, so they'll effectively be trapped in the original home and unable to move.

Say you took out a £150,000 mortgage and then became unable to work. After 10 years, the SMI paid would be about £50,000 + the Government's interest.

Previously, if the property has increased in value by £100,000, you could sell up, pay off the mortgage and buy a £100,000 property somewhere cheaper. Now, after paying off the Government, you'll only have maybe £40,000 left which won't get you anything and you won't be able to get a mortgage as you're not working. So if you absolutely had to move, you'd have to pay rent out of that £40,000 (plus all your other living costs, as you won't be entitled to most benefits with that level of savings) until that runs out and then the Government will end up paying some private landlord your rent through Housing Benefit, which will probably be at least twice what they were paying in SMI, with no possibility of recouping that.

It really seems like gesture politics with no attempt to think about whether it actually makes financial sense for anyone, including the Government.
#5 Bill24chev 2015-07-24 13:41
I don't know the statistics on conceiving/live births from rape but there will obviously be quite a few.
I do know that convictions for rape are no were near 100%.and many are unreported.
Will DWP now say to the victims
"You were not raped because a jury says so"

and for the unreported ones

"So! you did not know you had been raped until you gave birth to your third child."
#4 buster 2015-07-23 22:47
Quoting Bill24chev:
I thought that payment for a third child would only be made if concieved by rape.

Cheers Bill. It wasn't one of my better rants. I have now edited it as it didn't really make any sense.

#3 Bill24chev 2015-07-23 10:31
I thought that payment for a third child would only be made if concieved by rape.
+3 #2 buster 2015-07-22 14:08
I wonder what George now has in store for unfortunate home owners who have fallen on hard times through no fault of their own? Maybe they will be forced to allow Loyd Grossman and the BBC in to their homes to film a new series of through the keyhole to show what disapproving habits they may get up to? This would result in a new kind of "benefits street" light entertainment programme and might bring in much needed revenue to help George clear that all important deficit. Actually, this could self-fund the entire SMI scheme - a win win situation for George - and for the hard working general public who apparently do not claim and will never claim any kind of benefits whatsoever.

+5 #1 Bill24chev 2015-07-22 07:50
I personally am not affected by this.

However, assuming the value of a Home will increase. I believe that tax payers who subsidizing a mortgage should at least get their money returned when that mortgage is paid off and the property subsequently sold at a profit.

However the same rule should apply to the MP's second homes purchased from expenses.

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