Support for Mortgage Interest Relief (SMI)

If you have recently agreed to have you Support for Mortgage Interest (SMI) converted to a loan, this is for you.

Anyone who lacks mental capacity, so is not able to enter into contracts, cannot and must not agree to the loan. If you do the loan agreement is void.

There is a piece of legislation called “The Loans for Mortgage Interest Regulations 2017”
20 of the regulations includes:

Transitional provision: lack of capacity
20.—(1) Paragraph (2) applies where the following conditions are met in relation to an existing claimant—
(a) the Secretary of State is satisfied on or before 5th April 2018, or later than that date but within 6 weeks beginning with the loan payments offer date, that the claimant is a person who lacks capacity to make some or all decisions about entering into the loan agreement;
(b) an application for a decision as referred to in paragraph (6) is made on or before 5th April 2018, or later than that date but within 6 weeks beginning with the loan payments offer date; and

According to what is written if you have not agreed to the loan agreement, and have not stated you wish the payments to cease, the SMI benefit continues for a further 6 weeks.

(c) at the time the Secretary of State is satisfied as referred to in sub-paragraph (a), he has not received the loan agreement and the documents referred to in regulation 5 and has not received a notification from the claimant that the claimant does not wish to accept the
offer of loan payments.
(2) Where this paragraph applies, the amendments made by Schedule 5 shall be treated as though they were not in force until the day that is the earlier of (“the transitional end day”)—]

According to the regulations, if a person lacks mental capacity, SMI will continue as a benefit until such time, there is an appropriate person to act on their behalf.

Unfortunately, all Department for Work and Pensions (DWP) staff are unaware of this. They have stated if the person does not agree to the loan then their SMI will stop.

The policy can be viewed and downloaded here.
The Loans for Mortgage Interest Regulations 2017

It is a sorry indictment of the Department for Work and Pension that they do not train their staff. If the staff are not aware of this policy what else have they not been trained for? Is it any wonder that millions of pounds are not claimed for benefits people are entitled to.

SMI loans are discriminatory

The Government state “To protect taxpayers we have converted SMI into a loan as previous recipients have benefited from house
price gains whilst receiving public support for their housing, which is not fair to the taxpayer. Converting SMI into an interest-bearing loan means that the benefit will be financed in a more sustainable and equitable way. But this only affects people with mortgages, how about people who rent, they have no mortgage capital to pay off.

There is also another problem the compound interest they charge. With mortgage interest, it is calculated daily and added to your mortgage the day before the mortgage payment is due. The mortgage payment includes the interest, so as this is paid, no interest is paid on it. Essentially the Government is charging interest on interest. This is the same they do for that other loan (Student Loans) and eventually to the Universal Credit loan.

The Government are guilty of Disability Discrimination.

Equality Act 2010, Human Rights Act 1998, plus more legislation.
What about people who cannot work?
With the SMI noose around their necks, what can they do, nothing is what.
If a person gets bad enough to need sheltered or warden controlled housing. The house is too big for them and they can no longer manage it. Home Help no longer exists and they have to pay if they want help with their house. This has to be funded from their meagre benefit. What choice do they have, they cannot move as they may not have enough money after the government takes a slice for them to buy another place.
But never mind at long as the government gets its pound of flesh, who cares. Not the politicians who get a starting yearly salary of nearly £78,000 plus expenses. Subsidised food and drink, 24-hour bar plus other perks.
The legislation that affects us, does not apply in the Parliament buildings and some off-site government departments.

Now let’s look at this from an intelligent point of view.

You have or had an SMI loan and want to downsize

Can you downsize, in a word, the answer to most would be NO

You decide you want to downsize, but when you look at what you would receive once when your house is sold, taking off the huge SMI chunk of it, it is not enough. You would have insufficient proceeds to buy a smaller home. You are then stuck in a house larger than you need, that someone with a family could buy and live in.


The government want to assist people to stave off repossession, so it helps by paying someone’s mortgage interest. The average mortgage interest is likely to be under £200 a month, based on Government calculations. The Government state” “as people acquire equity in their house receiving interest relief is not fair to the taxpayer.” The government have said they do not want to assist people in paying to buy their homes
Is the Government is right?
House prices do increase but most house increase in value, so equity is relative.
If the house gains £50,000 in value, all other houses increase in value, so the cost to buy another house has also increased., so will be more expensive, to buy. The £50,000 gain in value of the house is wiped out. People do not gain equity in their house. The other factor is the more capital the homeowner pays off the lower the interest payments, so the SMI is less. So less the government has to pay out.


People rent other peoples houses / flat, etc..
All if not most of the rent is paid for by the Government.
Why do people rent out their properties, one reason, to make money, lots of it?

With the current scheme, it is better to rent than buy. No worries about mortgage payments, repairs, or other associated expenses. With rent, the government will pay it for you. Your Landlord is happy as the government is helping them to buy the house, and make money. It is the Landlord who makes the equity in the house, and not the person on benefits, but the government who bang on about home ownership are more than happy to pay Landlords to buy their houses. Is this fair to the taxpayer?

Another option is to swap your mortgage for a shared ownership deal. The other person with shared ownership charges you rent. The rent which is paid for by the Government. You have no mortgage so no interest to pay, so no SMI loan, and no capital to pay. The capital you do not pay could be put into an account and when it reaches the threshold, you can use it to buy back some of your property. You would have eventually bought back the shared ownership, you will then have no mortgage, and no SMI loan and interest charge on your house, thanks to HM Government.  Is this fair to the taxpayer?

To show we do not just inform, we take action as well

We fight, so you do not have to

To try and sort this out for the thousands affected, we had to escalate this to the Cabinet Secretary, Sir Jeremy Heywood. Jeremy is the head of the civil service. We were given a phone number to call the DWP permanent secretary (The highest level of Civil Servant in the DWP), we also him an email. The person it first went to was unhappy, we called the permanent secretary as can be seen in the second email number, which states:
“Here is the case I discussed with you, and attached is the email where (a member of our team) managed to get the Perm Sec’s number”
We were called by a person, who we will not name, who requested us to send her “The Loans for Mortgage Interest Regulations 2017” as shockingly like the other 4 people she was not aware of it. She stated she was going to read it and pass it to the benefit call centre. We informed her that thousand have likely been affected and that all SMI claims and people who have not signed are contacted to see if they have a lack of mental capacity.

From our email chain, we also noticed the following from a member of staff from the DWP’s Operation Directors Office.

A surprising thing is that we have found this on their website.

The location is
But you can get to it from this link Support for Mortgage Interest is changing

There is also a briefing document produced by the House of Commons called
Support for Mortgage Interest (SMI) scheme
which can be viewed and downloaded here, from the above link.

The document states the following on page 3

SMI changes to a loan from 6 April 2018

In the Summer Budget 2015, the Government announced plans to increase the waiting
period for SMI to 39 weeks from 1 April 2016, to keep the loan cap at £200,000, and to
change SMI from a benefit to an interest-bearing loan, secured against the
mortgaged property, from April 2018. Provisions to implement this scheme were
included in the Welfare Reform and Work Act 2016. Regulations to implement the loan
system were brought into force for most purposes on 27 July 2017: Loans for Mortgage
Interest Regulations 2017 (SI.No.725/2017). Existing claimants have been contacted by
Serco on behalf of the Department for Work and Pensions (DWP) and advised that if they
wish to continue to receive assistance they must apply for a loan.

You will note it states the document the DWP do not know about, as shown above
“Loans for Mortgage Interest Regulations 2017 (SI.No.725/2017).”

An email has been sent to an MP, who has been asked to raise this in parliament, whether they do or not, remains to be seen. This matter is too important not to be raised and dealt with.
If this matter is not raised, it will mean Parliament does not care for people in the UK.

This page will be updated with further developments.

15th April 2018