SMI does not pay the capital part of your mortgage – it only covers the interest part (Image: Getty)
According to the Bank of England (BoE), the average UK debt, which is the amount owed by each homeowner with a home loan, was £133,000.
Support for Interest (SMI) is a UK government loan that can pay the interest part of your if you have to start claiming benefits.
SMI is based on a standard and the amount of SMI you will get is calculated using this which is .
If you have £133,000 left of your , you will get an SMI loan worth 3.66% of £133,000. This works out at £4,868 or £406 per month.
:
A is a loan that consists of two parts: the capital or main part, which is the original amount you borrow.
You then pay interest and fees on top of this. If you have a with a fixed rate, you will pay the same rate of interest for the amount of time you ‘fix’ your .
You can fix a for between two and 10 years.
SMI only pays the interest part of your .
You do not need to pass a credit check to apply for SMI and it will not normally affect your credit rating.
You can apply for SMI if you start claiming
- (income-based)
- (income-related)
SMI can be used to repay interest on a and loan interest if the loan was taken out for essential home repairs, such as repairing dangerous faults or adapting a home for someone who is ill or disabled.
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How to claim SMI
When you start a benefit claim, you need to state that you need help with housing costs. You will need to fill in a form with the details
– The outstanding amount on any or home improvement loans
– The interest you are paying on a or home improvement loan
The form will then be sent to your lender, who fills it out and then returns it to the benefit office.
If you are eligible, your lender will fill in the form and return it to the benefits office. Any payments will be backdated when you were first entitled to the loan.
Applications can take months, so if you struggle to pay a speak to your lender, who can offer a payment holiday or switch to an interest-only by paying it off with savings.
Depleting your savings may also mean you are eligible for other benefits.
The MoneyHelper can help you see what other payments you may get.