You are here: Home - Mortgages - First Time Buyer - News -

Weak take-up for government’s new mortgage support scheme

0
Written by:
16/03/2018
With less than a month to go to the end of the Support for Mortgage Interest (SMI) Scheme, only 10,000 have registered for the government’s new loan option.

Royal London has renewed its call for the government to delay changes to the SMI scheme. From April, the SMI, which is claimed by low income pensioners and the unemployed to help with interest payments on their mortgages, will be converted from a benefit to a loan repayable with interest.

Around 100,000 people had been expected to take up the scheme and while all have been contacted, relatively few have replied. The figures show remarkably little progress has been made since a Freedom of Information request from Royal London dated 22 January 2018, which showed 6,850 people had taken up the loan offer.

Those who don’t take up the loan will lose their mortgage support from April. Helen Morrissey, personal finance specialist at Royal London, said: “These latest figures make for concerning reading because as it currently stands around 100,000 people will lose their mortgage support in less than a month’s time. While it is reasonable to suggest that some of these claimants may have made alternative arrangements to meet their mortgage interest payments there is a strong possibility that many of these people won’t and face a nasty shock come April.

“SMI claimants are among some of the most vulnerable people in society and the government must do more to help them understand the changes and what it might mean for them…We would urge the government to delay the implementation of these changes to ensure people have enough time and support to make an informed decision.”

The changes to SMI have drawn criticism since they were announced in the 2015 Budget. SMI is paid to homeowners in receipt of certain income-related benefits such as Jobseekers Allowance and Pensions Credit. It covers the interest payments on mortgages and some home improvement loans.

From the start of the new tax year, any SMI payments will need to be repaid to the government with interest when the property is sold, transferred into new ownership or on the death of the recipient (or their partner). The level of interest is determined by the gilt rate, which is currently 1.5%.

The Department for Work and Pensions (DWP) started sending letters out to those affected last year advising that they could either choose to take up the loan option or stop receiving the support.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
2355286-yawing-baby
Parents risk pension income over unclear child benefit changes

Thousands of parents may have inadvertently foregone future pension entitlements by not claiming child benefit following changes to the scheme....

Close