Mortgage support

There are two mortgage support schemes introduced by the Government, the Support for Mortgage Interest scheme (SMI) and Homeowners Mortgage Support scheme (HMS).

Support for mortgage interest (SMI)

Homeowners who have lost their jobs can claim support with payments on up to the first £200,000 of their mortgage after they have been unemployed for 39 weeks.

The scheme covers mortgage interest payments for those who have lost their jobs and who are dependent on means tested benefits, such as income support, jobseekers’ allowance and employment and support allowance. However, it only covers homes with either one person responsible for the mortgage, or where a couple have both lost their jobs. Mortgages in excess of £200,000 can still qualify for support but homeowners will have to top up interest for the amount above £200,000. Those who need to claim mortgage support should contact their Jobcentre Plus. If you’re receiving jobseeker’s allowance, you’ll only be able to claim help with housing costs for up to two years. There is no time limit to existing claims or to new claims from people receiving income support, pension credit or income-related employment and support allowance.

SMI as a benefit is ending on 5 April 2018, and will be replaced by a loan.

Homeowners mortgage support scheme (HMS)

The Homeowners Mortgage Support (HMS) scheme will allow borrowers to defer interest payments for up to two years, if they lose their job, the initiative will allow people who temporarily lose income to defer some of their mortgage interest payments for up to two years, with shortfalls backed by a government guarantee. However, it is only available to those who still have some regular household income and can meet 30% of their interest payments. This would include someone who had wages cut or a couple where one partner has lost their job. Couples who both lose their jobs, or individuals who lose all their income, will need to seek help through the Support for mortgage interest (SMI) initiative. Mortgage interest payments that have been deferred will eventually have to be paid back and interest will have been charged on them in the meantime, increasing the overall cost of the mortgage. It is only open to those who bought their home before December 2008 and have a mortgage of less than £400,000 and savings and investments of less than £16,000. You will need to check whether your lender is participating in this scheme.

How to claim mortgage support

Borrowers who are interested in applying for Homeowners Mortgage Support finding out about comparable arrangements should contact their lender in their first instance to check their eligibility.
For lenders offering HMS with the Government guarantee, the borrower must:

have bought their home before 1st December 2008
be an owner-occupier – the scheme is not open to buy-to-let or investment properties
have an outstanding mortgage of less than £400,000 and having savings of less than £16 000
have a regular household income and should be able to make a minimum contribution of 30% of the total interest payment
have talked through other options with their lender and have been making regular payments for at least five months
have sought independent money advice

Mortgage rescue

Mortgage rescue is a package of measures aimed at the most vulnerable families and is subject to a range of eligibility criteria. It has been available in all local authorities in England and Wales since January 2009 and operates by bringing together local authorities, Registered Social Landlords (RSL), lenders and debt advice agencies. There are two elements: ‘shared equity’ (where an RSL provides an equity loan enabling the householders’ mortgage repayments to be reduced) or ‘government mortgage to rent’ (where an RSL clears the secured debt completely and the applicant pays rent to the RSL at a level they can afford). The scheme will not help those who are in negative equity.

A similar scheme is available in Scotland called Home Owners Support Fund.

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