UK Finance and the Building Societies Association (BSA) are calling for an overhaul of Support for Mortgage Interest (SMI) loans, to help struggling homeowners with the financial impact of Covid-19
People who are not working can receive SMI to help with interest payments on their mortgage. SMI applicants currently have to wait for 39 weeks after losing their job before they are able to make a claim. Therefore, the joint campaign is asking for two key changes:
Allow people on Universal Credit to claim SMI if they are working reduced hours.
Charles Roe, director of mortgages at UK Finance, said: "The wait time and eligibility criteria for SMI is preventing much-needed help going to struggling homeowners when they need it most – before their financial circumstances get worse and mortgage arrears start building up.
“We are calling on the government to urgently review the SMI scheme eligibility criteria to ensure those struggling with payments are not waiting over nine months before they can access this support."
Paul Broadhead, head of mortgage and housing policy at the BSA, said: “Lenders, government and regulators have collaborated well during the Covid-19 pandemic to ensure support has been available to mortgage holders who have experienced financial difficulties. However, as the end of these schemes is now in sight and unemployment looks set to rise sharply, without some further action the risk of home repossession could become a reality for many families and individuals despite the best efforts of lenders.
“Without the reforms we are recommending, we expect more government funding will be required for the provision of housing benefits for former homeowners who were unable to get the financial support they needed, when they needed it.”