You are here: Home - Mortgages - Buy To Let - News -

117,150 facing mortgage cliff edge

0
Written by:
06/02/2018
Government plans to replace the benefits paid to help people pay their mortgage interest with repayable loans could cause real hardship, according to a Freedom of Information (FOI) reply obtained by Royal London.

The mutual insurer is calling on the government to delay the controversial changes until households have been given proper information to prepare for the change.

Official figures obtained by the insurer from the FOI request show that around 124,000 households currently receive regular benefit help with their mortgage interest payments or home improvements, including around 57,000 pensioners.

The government began contacting benefit claimants last July but not all have had the information yet with just 10 weeks to go until the deadline when help will be terminated.

Royal London first raised the alarm in October last year that government communications on Support for Mortgage Interest (SMI) changes were inadequate.

SMI, claimed by low income pensioners and the unemployed, which costs around £200m a year, converts to a loan after 6 April 2018. Just 6,850 households had signed up for the new loan scheme by 22 January, with another 18, 177 considering the move.

Benefit cessation and final reminder letters are due to be sent in February and March, the government confirmed.

After April 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.

Helen Morrissey, personal finance specialist at Royal London, said: “It is truly shocking that many thousands of low income families are yet to receive the information they need on the fact that their mortgage interest help could be switched off in just ten weeks time. If thousands of people fail to complete the process in time they could face real hardship and even potential repossession if they can no longer afford to meet their mortgage interest bills.”

Morrissey said the government must pause the policy implementation until more claimants have had all the information and are prepared for the loan conversion changes.

SMI is paid to homeowners in receipt of certain income-related benefits such as Jobseekers Allowance and Pensions Credit. Of those claimants, around 57,000 are of pension credit qualifying age while 67,000 are working age.

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

A guide to switching energy provider

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

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

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.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

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...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
2276283-confusedwoman
How much should you really be saving in your pension?

It’s an age old question but it’s a difficult one to answer as it depends on your income, your spending...

Close