The Building Societies Association welcomes changes to the Support for Mortgage Interest loan, which comes into effect today
Homeowners who are in financial difficulties are now able to get support with their mortgage payments after 3 months, rather than the previous 9 months, a change which could prevent them getting into serious mortgage arrears.
Family finances are under growing pressures as the cost of food, fuel and energy continue to rise, and for some this will mean facing a period of real financial difficulties. Whilst lenders provide tailored support to those who are struggling, and will continue to do so, the Support for Mortgage Interest (SMI) loan helps homeowners on certain benefits, by paying the interest on their mortgage.
The zero-earning rule for those on Universal Credit has also been removed, meaning homeowners will not lose their entitlement to SMI as soon as soon as they find any work. Previously this restriction may have discouraged those on lower incomes seeking a return to work.
The BSA has long been calling for these changes, as a nine-months waiting time for homeowners to receive support could mean they would be over 6 months in arrears before they are given any Government support. At this point it is significantly more difficult to resolve their financial situation.
Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association (BSA) said:
“This is a common-sense change from the Government. Enabling access to the SMI loan much earlier could well be the difference between a family keeping a roof over their heads or them facing the prospect of their home being repossessed and having to find an alternative, government supported, rental accommodation.
“Also, as SMI is a loan not a benefit, the changes introduced today should not have a long-term financial detriment on Government expenditure.”
Whilst the number of borrowers with mortgage arrears has not yet significantly increased during the current cost of living crisis, lenders are sensitive to the rising number of people facing a squeezed household budget and have teams who are well trained and experienced in providing tailored support to those who are struggling.
Anyone who is worried about their finances and ability to pay their mortgage should therefore get in touch with their lender or a debt adviser as soon as possible. They will provide a safe space for a confidential, non-judgmental chat and will do everything possible to help each borrower with options based on their own personal circumstances.
Practical advice is also available from the BSA and National Debtline in the booklet What to do if you can’t pay your mortgage