Tens of thousands on Universal Credit missing out on underused housing help worth £1,000s

TENS of thousands of homeowners on Universal Credit are missing out on financial help that's potentially worth thousands of pounds.

If you are on benefits and struggling to pay your mortgage you could be entitled to a loan from the government to help pay your interest, known as Support for Mortgage Interest (SMI)

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The support is available to the roughly 200,000 people on Universal Credit who have a mortgage, according to Policy in Practice.

But the latest figures from the Department of Work and Pensions (DWP) show that just 13,128 people were claiming the support between April and June this year, meaning many are missing out.

It comes as a number of homeowners have been struggling to keep on top of their mortgage repayments as interest rates skyrocketed following geopolitical issues such as Russia's invasion of Ukraine and wider economic uncertainty.

And its not just mortgage costs which have risen, the price of food and other household expenses has also shot up putting further pressure on families.

You are entitled to the support if you are on a range of benefits including Universal Credit, Pension Credit, Income Support, Jobseeker’s Allowance and Employment and Support Allowance.

Last year, the government also made changes to the eligibility criteria for those looking to get SMI.

For example, the qualifying period for Universal Credit claimants has been reduced from nine months to three months.  

This means you now must have been on the benefit for at least three months before you can claim, so more people than ever are eligible.

Also, Universal Credit claimants who have earned income may now qualify for SMI.

Previously, claimants making any money even if it was very little could not get hold of the benefit.

You should also be aware that claiming SMI will not impact your credit score.

Deven Ghelani, from Policy in Practice, told The Sun that while these changes are welcome, SMI payments are "likely to be much less than the actual amount of interest charged if the claimant is on a variable or tracker mortgage rate. "

"As well as claiming SMI, homeowners who are struggling with rising mortgage costs ask their lenders for forbearance [temporary postponement of loan payments]." he added.

"They can also check if they’re getting all benefits they’re eligible for to make it easier to manage mortgage payments, given that £23 billion of support is unclaimed each year."

What you will get

If you qualify for the support, you will usually get help paying the interest on up to £200,000 of your mortgage.

The interest rate used to calculate the amount of SMI you’ll get is currently 3.16%.

So, for example, if you have £250,000 of your mortgage left to pay and you’re eligible for SMI for up to £200,000.

At the current SMI interest rate, you’ll get a loan of 3.16% on £200,000 across a year. This is £6,320 a year or £526.66 a month.

You should also be aware that you will only get £100,000 if you are on Pension Credit or you were claiming another benefit before January 2009 and you were below the state pension age at that time.

How is the money paid?

SMI is normally paid direct to your lender.

You can ask to stop getting SMI at any time by contacting the office that pays your benefit.

Do I need to pay any money back?

You don't have to repay an SMI loan until you sell or transfer ownership of your home.

If you choose to do this then you will have to pay interest, which can go up or down, but the rate will not change more than twice a year.

Interest will be added every year until the loan is completely repaid or written off.

How to apply?

If you want to apply for SMI, you’ll need to fill in and sign in a form. You do not need to pay a fee to apply.

Before filling in the form, you’ll need to:

• Find out how much mortgage or home improvement loans you have left to pay
• Find out how much interest you’re paying on your mortgage or home improvement loans
• Get your partner to agree to sign the form, if you have a partner

You’ll then need to send the form to your lender for them to complete. Your lender will send the completed form to the office that pays your benefit.

Contact your local council of the DWP if you have any questions about how to apply.

Other help you can get

If you are struggling with living costs there are a number of support measures available to you.

The Sun recently published an article about all the extra support you can get if you claim Universal Credit, which you can read here.

For example, cash strapped families can get greater support via the Household Support Fund (HSF)

The Household Support Fund (HSF) is a pot of cash that local councils give out to households on low income, but it varies based on where you live. 

The support package was introduced by the Government in 2021, however it has been extended a number of times. 

How much you are eligible for is usually based on what benefits you already receive and your financial situation.

But in some cases you can get a one off payment of £500 to help with your living costs.

You could also get £150 to help towards your heating bill this winter or up to £1,000 towards the free insulation of a new boiler.