Support for Mortgage Interest

Transcription

1 Support for Mortgage Interest welfare changes

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3 Your support for Mortgage Interest will end on 5 April 2018 You currently get a benefit called Support for Mortgage Interest (SMI) which is also known as Help with Housing Costs. This benefit pays towards the interest on your mortgage and some home improvement loans which you may have taken out with a lender. Support for Mortgage Interest benefit will end on 5 April The Department for Communities can offer you a Support for Mortgage Interest loan from 6 April The Support for Mortgage Interest loan is one option you have. This booklet tells you about this option and some other options you may have. It is your responsibility to make sure you pay the interest on your mortgage and any home improvement loans from 6 April If you don t take action your home may be at risk of repossession by your lender. SUPPORT FOR MORTGAGE INTEREST 3

4 Please read this information booklet carefully. It gives you important information to help you decide how you are going to carry on paying the interest on your mortgage and home improvement loans you may have taken out with a lender and will: tell you that Support for Mortgage Interest benefit will end and what support is available to you; tell you that the Department for Communities will offer you a Support for Mortgage Interest loan; give you examples of other ways to pay your mortgage interest instead of by Support for Mortgage Interest loan; give you two checklists things to think about before Serco call you, and things to do before you make your decision; and provide you with details of organisations where you can get help and advice. Please have this booklet to hand when Serco (who are working on behalf of the Department for Communities) call you. They will go through the information in this booklet in more detail. If you have a husband / wife / partner / civil partner living with you, you must talk to them about how you will carry on paying your mortgage interest. You can t get a Support for Mortgage Interest loan unless the correct loan documents are signed by both of you. Use the call with Serco to talk through your options. If you have a husband / wife / partner / civil partner who lives with you, you might find it easier to have the call together. 4 SUPPORT FOR MORTGAGE INTEREST

5 The Information in this booklet is not financial advice. It is important that you decide how you want to pay your mortgage interest from 6 April Contact details for independent organisations can be found later in this booklet. SUPPORT FOR MORTGAGE INTEREST 5

6 What do I need to do now? To make the right decision for you and your household you need to find out how much of your mortgage is left to pay and how long it will take you to pay it. You also need to know how much mortgage interest you pay and how much the Department for Communities pays as a benefit. This information will help you decide how to carry on paying the interest on your mortgage and home improvement loans from 6 April Your annual statement from your mortgage lender will tell you how much mortgage interest you pay. Your most recent award letter from the Department for Communities will tell you how much Support for Mortgage Interest benefit is paid. 6 SUPPORT FOR MORTGAGE INTEREST

7 What are my options? Once you know the information about your current mortgage you can start thinking about ways you can pay your mortgage interest from 6 April Some examples are: ACCEPT THE OFFER OF A SUPPORT FOR MORTGAGE INTEREST LOAN FROM THE GOVERNMENT The Department for Communities will offer you a Support for Mortgage Interest loan. The mortgage interest payments your lender currently gets from the government would carry on, but the difference is that you will have to pay back, with interest, any payments made after 6 April The loan payment amounts would be the same as you get now so long as your circumstances stay the same. You don t need to pay back the loan until you sell your property or ownership is transferred. More information about the loan can be found on the next few pages. CONTACT YOUR MORTGAGE LENDER Mortgage lenders know that Support for Mortgage Interest benefit is ending on 5 April Your mortgage lender may be able to recommend other ways to manage your mortgage payments for example changing your mortgage interest rate. SPEAK TO FAMILY AND FRIENDS Family and friends may offer other solutions that would be practical to you. If someone you live with has their own income you may want to ask them to help. Please check with the office that pays your benefit to see if this extra income will affect the amount of benefit or Pension Credit you get. SUPPORT FOR MORTGAGE INTEREST 7

8 USE SAVINGS AND INVESTMENTS If you have savings or investments, you may be able to use these to pay the interest on your mortgage or reduce the overall amount that you owe to your mortgage lender. You may want to get financial advice before doing this. Please check with the office that pays your benefit to see if using your savings or investments will affect the amount of benefit or Pension Credit you get. CREDIT UNIONS OR A BANK / BUILDING SOCIETY A credit union or a bank / building society may offer low interest loans as well as savings and bank accounts. You ll need to check what interest rate they charge. MOVE TO A PROPERTY WITH A DIFFERENT MORTGAGE The size of the property and where it is located can make a difference to how much it is worth. Moving house may change the amount of mortgage you need, for example you may need a smaller mortgage, or you may not need a mortgage at all. There may be more options for you to think about. It is important that you decide the best option for you and your household. HELP AND SUPPORT TO MAKE YOUR DECISION You can get free and impartial money advice, over the telephone and online. 8 SUPPORT FOR MORTGAGE INTEREST

9 The organisations below can advise you who to talk to and may be able to give you some other options to think about: Welfare Changes Helpline Contact your local Citizens Advice or Independent Advice Provider Housing Rights or call on Citizens Advice Debt Advice or call on DEBT CHARITIES A debt charity can offer you advice on consolidating all debts to reduce your outgoings. More information about debt charities can be found on the Money Advice Service website or call SUPPORT FOR MORTGAGE INTEREST 9

10 Information about the Support for Mortgage Interest loan The Department for Communities will offer you a Support for Mortgage Interest loan and you need to decide if this is the best option for you. It is different to a normal loan. You will not receive a lump sum. Instead, regular payments will be made towards the interest on your mortgage and some home improvement loans. You will need to pay these back, plus interest, when you sell or transfer ownership of your property. The amount you owe will go up with every payment the Department for Communities makes. So, if the Department for Communities make 12 payments of 50 you will owe 600 (plus interest) KEY INFORMATION ABOUT THE SUPPORT FOR MORTGAGE INTEREST LOAN the loan won t cost you anything to set up and there will be no credit check we will add interest to the total amount you owe and the rate will be similar to the rate the Department for Communities pays until it is paid back or written off the interest rate charged on the loan will change no more than twice a year. It can go up and down Serco will tell you the current interest rate when they call you 10 SUPPORT FOR MORTGAGE INTEREST

11 where applicable, the Department for Communities will place a charge(or in some cases a mortgage) over your property to secure the loan where the Department for Communities is unable to secure the loan by a charge (or in some cases a mortgage) it will still offer the loan and may secure it as a Statutory Charge on the property at a later date when you sell your property or ownership is transferred, the loan must be paid back from any remaining equity your loan may stop if your income based benefit payment changes or ends. Interest will still be added every year on the outstanding loan amount you owe until it s paid off you will get a statement every year telling you how much Support for Mortgage Interest loan you have borrowed and how much interest has been added you can cancel the loan payments at any time. If you cancel the loan payments it is your responsibility to make sure that you pay the interest on your mortgage and home improvement loans SUPPORT FOR MORTGAGE INTEREST 11

12 How the Support for Mortgage Interest loan is repaid You will never need to make monthly repayments to pay back the Support for Mortgage Interest loan unless you choose to do so. You will repay the Support for Mortgage Interest loan when you sell your property or transfer ownership of it. Most people will repay the loan from equity when the property is sold or ownership is transferred. Equity is the money left after you pay back everything secured against your property, including your mortgage. If there isn t enough equity left to repay the loan, the Department for Communities will write off the remaining amount and consider the loan fully repaid. There are two examples on the following page. They show how the equity you have left affects how much you pay back. VOLUNTARY REPAYMENTS You may wish to make voluntary repayments on the loan. The minimum payment is 100 or the outstanding balance if it is less than SUPPORT FOR MORTGAGE INTEREST

13 Example 1 You do have enough equity to pay back your Support for Mortgage Interest loan and interest in full. You sell your property for 95,000 Outstanding mortgage amount (including any other secured loans) to pay back is 80,000 The Equity (amount remaining) 15,000 Support for Mortgage Interest loan amount and interest which the Department for Communities recovers is 5,000 Equity remaining 10,000 Example 2 You don t have enough equity to pay back your Support for Mortgage Interest loan and interest in full. You sell your property for 95,000 Outstanding mortgage amount (including any other secured loans) to pay back is 90,000 The Equity (amount remaining) 5,000 Support for Mortgage Interest loan amount and interest is 7,000 The Department for Communities recovers the equity 5,000 The department for Communities write off 2,000 The examples in this leaflet are for illustrative purposes only. SUPPORT FOR MORTGAGE INTEREST 13

14 Checklist to help you Things to think about before Serco call you 1. Make note of any questions you have. You can ask them during your call with Serco 2. If you need someone with you to help you with the phone call, or would prefer a time that suits you phone If you have a husband / wife / partner / civil partner you might find it easier to book an appointment on so you can listen to the information together Things to do before you make your decision 1. Find out how much mortgage and mortgage interest you have left to pay as well as how much the Department for Communities pay as Support for Mortgage interest benefit 2. Think about ways you can pay the interest on your mortgage and home improvement loans 3. Get help and support from family, friends or an independent organisation, if needed 14 SUPPORT FOR MORTGAGE INTEREST

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16 Further Information There is information on all aspects of Welfare Changes and Support for Mortgage Interest available at welfare changes Crown Copyright 2017 WCSMI001