I am struggling with my rent/mortgage and have arrears, what do I do?
If you are in financial difficulty and you are struggling with your rent or mortgage, it is best to seek assistance as soon as possible to reduce the risk of your arrears increasing. We will help look at solutions to prevent your arrears from causing you to become homeless. Referrals for debt advice and floating support can be made to help manage your budget. All options to alleviate your situation will be explored and will be tailored to your own personal situation. There are a variety of debt advice agencies that you can contact, a number are listed in our leaflets which can be downloaded/viewed on our housing leaflet page.
Our fact sheet Dealing with Arrears will help you understand the process followed by your lender/landlord where they seek to recover possession of your home..
Support for Mortgage Interest (SMI)
If you're on certain benefits and you're struggling to pay your mortgage , you might be able to get help from the government to pay the interest on your mortgage. This is called Support for Mortgage Interest (SMI).
Who gets SMI?
To get Support for Mortgage Interest, you must be out of work or of State Pension age, and get:
- Income Support
- Income-based Jobseeker's Allowance
- Universal Credit, or
- Pension Credit
There is a 39 week waiting period from the time you claim SMI until you first payment is made (unless you're getting Pension Credit, in which case you can get help immediately).
Because there is less than 39 weeks before SMI changes from a benefit to a loan, any new claims will receive SMI as loan, not as a benefit (unless you're on Pension Credit)
If you do any paid work during these 39 weeks, your waiting period will stop - and you can start again the next time you are out of work.
What you'll get
The government will pay the interest on up to £200,000 of your mortgage (or up to £100,000 if you're getting pension credit).
The government will use a standard interest rate to calculate the amount they will pay. In other words, the interest rate the government uses might be different to the actual interest rate on your mortgage. The government interest rate is variable so it might go up or down over time.
The payments will normally be made directly to your mortgage lender.
There is no help available to help repay the capital (the amount you originally borrowed) of your mortgage.
Key facts about the SMI loan
- There are no fees to set up the loan.
- You don't have to get a credit check to get the loan.
- Unlike a normal loan, you don't have to make regular repayments - unless you want to.
- Interest will be added to the total you owe, until the loan is paid back or written off.
- You will not get a loan automatically - you have to choose to take one out.
- The loan is secured against your home. When you sell your home or transfer the ownership of it to someone else, you must pay back the loan out of any equity left over once your mortgage is repaid.
How long can you get SMI for?
If you're claiming Jobseekers Allowance, you can only get SMI for up to two years.
If you get Income Support, Income - related Employment and Support Allowance, Universal Credit or Pension Credit, there's no limit to how long you can claim SMI for.
Contacting your mortgage lender.
Mortgage lenders know SMI will no longer be available as a benefit from April 2018. They might be able to offer different ways to pay your mortgage, such as payment holidays or extending the term of your mortgage. You might also be able to switch mortgages to get a better interest rate.
Before you decide whether an SMI loan is the best option for you and your household, it's a good idea to seek professional advice.
You can call the Money Advice Service on 0800 1387777 for free, impartial money advice. Lines are open Monday to Friday, 8am to 8pm and Saturday, 9am to 1pm. Calls are free.
Our fact sheet Arrears and Repossession will help you understand the process followed by your lender/landlord where they seek pocession of your home.