Following the publication of the Support for Mortgage Interest (SMI) statistics, Royal London personal finance specialist Helen Morrissey said that “we could see many people fall into arrears”.
SMI is paid to homeowners in receipt of certain income-related benefits, such as jobseekers allowance and pensions credit, and it covers the interest payments on mortgages and home improvement loans.
However, the latest figures revealed that the number of eligible people accepting the SMI loan has “ground to a halt” over the past three months, with 61,000 people declining it and just 21,000 people accepting or intending to accept it.
Furthermore, the DWP is yet to make successful contact with an additional 15,000 eligible claimants, which Morrissey added is a “real concern”.
“We have no idea how these people intend to pay their mortgage interest and over the coming months we could see many people fall into arrears,” Morrissey added.
The Royal London personal finance specialise has urged the government to “do more” to ensure people get the support the need to make these decisions, otherwise the responsibility will fall onto mortgage lenders to “pick up the pieces”.
Up until April 2018, SMI had been paid as a free benefit. However, new changes have meant that SMI payments will need to be repaid to the government with interest when the property is sold, transferred into new ownership or on the death of the recipient or their partner.
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