Help with mortgage costs: Support for Mortgage Interest explained

If you own your home and fall on hard times, you cannot get the Universal Credit housing element, but there is separate help with your mortgage interest called Support for Mortgage Interest. It is now a loan rather than a benefit, which means it must be repaid, so it is important to understand how it works before taking it. This guide explains Support for Mortgage Interest, who can get it, and the recent changes that make it more accessible.

What Support for Mortgage Interest is

Support for Mortgage Interest, or SMI, is a government loan that helps homeowners on certain benefits pay the interest on their mortgage. It does not help with the capital you borrowed or with other costs such as insurance or arrears, only the interest. Because it is a loan, it is repaid with interest when you sell your home or transfer ownership, and it is secured against your property in the meantime.

Who can get it

You may be able to get SMI if you own your home and receive a qualifying benefit, which includes Universal Credit, Pension Credit, income-based Jobseeker's Allowance, income-related Employment and Support Allowance, or Income Support. You generally need to have a mortgage or certain home loans, and to meet the conditions of the benefit you are claiming. SMI is paid towards the interest on your loan, usually direct to your lender.

The waiting period

For Universal Credit claimants, there is a waiting period before SMI starts, which was reduced from nine months to three months in 2023, so you can now get help sooner than before. For people on Pension Credit, SMI can usually be paid from the start without a waiting period. This shorter wait for Universal Credit claimants is an important improvement, as it means help arrives before financial problems become severe.

The zero earnings rule has gone

An important recent change is the removal of the so-called zero earnings rule for Universal Credit claimants. In the past, you could not get SMI if you or your partner had any earnings at all, even very low ones. Now, Universal Credit claimants with earnings can still qualify for SMI, which opens it up to many homeowners in low-paid work who would previously have been shut out.

How much you can get

SMI pays the interest on your mortgage up to a limit, which is the interest on up to £200,000 of your loan for most working-age claimants, or a lower limit for people on Pension Credit. The interest is calculated using a standard rate set by the government rather than your actual mortgage rate, so if your own rate is higher, SMI may not cover all of your interest. It does not cover capital repayments, so you would still need to deal with those separately.

It is a loan, so weigh it up

Because SMI is a loan secured against your home, it is worth thinking it through. The amount you receive builds up as a debt that is repaid, with interest, when you sell or transfer your home, which reduces the money you eventually take from the property. On the other hand, the interest charged on SMI is often lower than a mortgage rate, and accepting it can prevent you falling behind and risking repossession, so for many people it is worthwhile.

How to apply

You apply for SMI through the benefit you are claiming, so if you are on Universal Credit you report your housing costs and ask about SMI through your claim, and the DWP will send information about the loan and ask you to agree to its terms before it is paid. Because it is a loan with legal terms, take the time to understand what you are agreeing to, and get advice if you are unsure.

Other help for homeowners

SMI is not the only thing to consider if you are struggling with your mortgage. Your lender has a duty to treat you fairly and to consider options such as a temporary reduction in payments or a change to your mortgage term, so talk to them early. Free debt advice from organisations such as Citizens Advice or StepChange can help you look at all your options together, of which SMI may be one part.

SMI and selling your home

Because SMI is a loan secured against your property, it is repaid, with the interest that has built up, when you sell your home or transfer ownership, or sometimes from your estate. This means it reduces the amount you eventually take from the property, so it is worth keeping track of how much SMI you have received. For many people, though, the trade-off is worthwhile, as it helps them stay in their home in the meantime.

SMI for pensioners

People who receive Pension Credit can usually get SMI without a waiting period, so help can start quickly, although the amount of mortgage on which interest is paid is capped at a lower level than for working-age claimants. For older homeowners on a low income, SMI alongside Pension Credit can be valuable, which is another reason to check Pension Credit entitlement, as it can open the door to help with mortgage interest too.

Keeping up with the rest of your mortgage

It is important to remember that SMI only helps with interest, not the capital you borrowed, and only up to a standard rate. You will still need to deal with capital repayments and any shortfall between the standard rate and your actual rate. Talk to your lender about your options, and get free debt advice, so that SMI forms part of a wider plan to keep your mortgage manageable rather than being relied on alone.

Get advice before you commit

Because Support for Mortgage Interest is a loan with legal terms, and because it interacts with the rest of your finances, it is well worth getting free advice before you agree to it. An adviser can help you weigh it up against other options, understand how the loan and interest will work over time, and make sure you are also claiming any other help you are entitled to. Taking advice first helps you make a confident decision rather than agreeing under pressure.

Act early if you are struggling

If you are finding your mortgage hard to manage, the most important thing is to act early rather than wait until you are in serious arrears. Contact your lender, get free debt advice, and ask about Support for Mortgage Interest through your benefit claim. The sooner you seek help, the more options you have to keep your home, so do not put off dealing with mortgage worries.

In short

Support for Mortgage Interest is a government loan that helps homeowners on certain benefits pay their mortgage interest. It is repaid with interest when you sell or transfer your home. The waiting period for Universal Credit claimants is now three months, and the zero earnings rule has gone, so more homeowners in low-paid work can get help.

Where to get help

If you are struggling with your mortgage, get advice early from Citizens Advice or a free debt charity, and talk to your lender. For renters' equivalent support, see our guide to the Universal Credit housing element.