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.