People who are claiming Universal Credit will be eligible for a loan to help with mortgage interest repayments after three months instead of nine, according to a policy in the long-delayed UK government Autumn Statement.
The Statement, released on 17th November, featured a range of changes to tax allowances, the minimum wage, energy caps and several other measures from 2022 until 2025. However, the most significant change for people who have taken right to buy mortgages affects SMI payments.
The Support for Mortgage Interest payments is a unique type of government loan that can help pay the interest on up to £200,000 of a mortgage or loan if a person with a mortgage has income support, Universal Credit, pension credit or is on a legacy income support system such as Jobseeker’s Allowance.
It is then subsequently repaid with interest once the home is sold or the ownership is transferred. If there is a shortfall between the payments paid and the value of the home, such as in cases where house prices significantly reduce and leave a homeowner in negative equity, the owner will pay back what they can with the rest being written off.
This can help reduce the risk of people who are out of work long-term from going insolvent through the build-up of unpaid mortgage repayments, although the nine-month wait time was a problem as it meant that the only people who would typically be able to benefit from this were people with significant savings.
The reduction of the waiting time from nine months to three months helps more people to benefit from the scheme during a time when bank interest rates have increased at a level not seen in decades.
One other significant part of the change is that the zero earnings rule, which meant that people who were on Universal Credit due to not earning over the threshold could not claim SMI payments, has been removed, which means that people in low-income work can receive support.
