News In Focus
Mortgage Interest Support comes under review
UK ministers have published a consultation on the future of the Support for Mortgage Interest (SMI) scheme, under which those receiving certain benefits may be entitled to help towards their mortgage costs.
The Government is looking to review how help is provided from 2013, when Universal Credit will replace the working age income-related benefits, income-based jobseeker’s allowance, income-related employment and support allowance, and income support – the benefits which (along with pension credit) may trigger entitlement to SMI.
Among the options under consideration is that payments only run for a set period of time, rather than for as long as the claimant remains eligible.
Payments received after a cut-off date might also have to be repaid to the Government when a property is sold.
At present the support is paid at a set rate of 3.63% rather than the actual interest paid by the borrower, so that some claimants are in effect getting payments towards their capital as well.
Welfare Reform Minister Lord Freud said: "The current system of SMI payments does not encourage people to get on top of their own finances. It is also not sustainable. Even with today’s low interest rates it costs government £400m a year.
"We are committed to supporting homeowners to stay in their own homes when times are hard. But in the future this type of support must be fair and affordable, so we are seeking views from experts and the wider public, including options for putting a charge on the homes of future claimants so when they sell up we can recoup some of the costs."
Click here to access the consultation.