The Mortgage welfare state safety-net has radically changed. What was a benefit for 70 years has now been replaced by a DWP loan and property charge scheme. Consider a free Absolute armed forces mortgage and repayment “Plan B” health check.

A mortgage welfare safety-net has been a feature of the UK benefit system for almost a century, since the start of the growth in private home ownership. The key support for Mortgage Interest Benefit that we know today was first introduced in 1948. However, in April 2018 what was previously a benefit changed radically to become a DWP loan scheme, now known as the Support For Mortgage Interest Loan Scheme (SMILS) with it technically an element of the new Universal Credit benefit.

The impact on mortgage holders is, should their circumstances change due to serious illness or death they need to claim SMILS support, a DWP loan charge will be taken on their property and any state support provided will be repaid on any subsequent change of property title – for example due to property sale, borrower separation, divorce or death. The only reason that DWP will not seek repayment of their loan is if there is no equity left in your property. The scheme is means-tested and conditional, with the support available paying the mortgage interest on your loan, but not the capital, for the first £200,000 of an outstanding mortgage (£100,000 if you are in receipt of Pension Credit).

This has implications for people and families who make up the 10.9 million mortgagors in the UK as those who claim under the new welfare mortgage safety-net scheme effectively now end up with an additional second loan to pay the interest payment support provided to support their main mortgage loan.

IMPORTANT – Access to SMILS support is subject to means – testing and of particular relevance to dual earning andjoint mortgaged clients also forms part of a new “no earnings” rule. This means that should any party to the mortgage still be working and have “earned income” then you would be ineligible for the welfare mortgage loan  support available.

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If you would like to discuss your mortgage and/or a back up repayment “Plan B”, contact Absolute Military at inf0@absolutemilitary.co.uk