The Building Societies Association welcomes changes
Changes to the government’s Support for Mortgage Interest (SMI) loan scheme, effective from Monday, April 3, have enabled homeowners who are in financial difficulties to get support with their mortgage payments after three months, rather than the previous nine months.
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 they find any work.
Those qualified for the SMI loan scheme can get help paying the interest on up to £200,000 of their mortgage or loans taken out for certain repairs and improvements to their home.
The government said an additional 200,000 Universal Credit claimants will be able to access quicker support with their mortgage due to the changes in the scheme.
“The fear of losing your home when you have fallen on difficult times is incredibly stressful and makes getting back on your feet all the more difficult,” Mims Davies, minister for social mobility, youth and progression, stated. “This increased support is an important lifeline to help provide stability for those who are seeking to find work and move back towards long-term prosperity.”
The Building Societies Association (BSA) said it has long been calling for these changes, pointing out that a nine-month waiting time for homeowners to receive support could mean they would be over six months in arrears before they are given any government support.
After a long campaign we welcome the changes that come into effect today that will help struggling homeowners get financial help through the SMI loan after 3 months rather than 9 months.
— BSA (@BSABuildingSocs) April 3, 2023
We call it a common-sense change from government. https://t.co/PCsWrzFp9R pic.twitter.com/VqPWuagDgv
“This is a common-sense change from the government,” Paul Broadhead (pictured), head of mortgage and housing policy at the Building Societies Association, stated, welcoming the changes to the SMI loan scheme. “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.”
Meanwhile, the BSA has also reminded borrowers who are worried about their finances and ability to pay their mortgage to get in touch with their lender or a debt adviser as soon as possible.
The association said that while 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.
“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,” the BSA said, adding that practical advice is also available from its booklet ‘What to do if you can’t pay your mortgage’.
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