As the leave ends, urgent support is needed for struggling homeowners


UK Finance and the Building Societies Association are calling for significant changes to the Mortgage Interest Support (MIS) program to help struggling homeowners as the leave program draws to a close.

SMI is a government loan program that helps homeowners who receive allowances[1], but as it is, they have to wait 39 weeks to claim, during which time their financial situation can become so difficult that they cannot stay in their home.

The government’s leave program, along with other support measures, protected millions of people from significant financial hardship during the pandemic. However, the holiday is only two weeks away from closing, so we are asking for two key changes from the government:

  1. Reduce the wait time to access the MCH from 39 weeks to 13 weeks, to ensure that help is provided when people need it most

  2. Allow people benefiting from universal credit to claim the SMI if they work reduced hours

The SMI is a loan and not a benefit, which means that these changes will have a very limited impact on the government budget, but will have a huge impact on the households that will benefit from them.

Mortgage lenders have granted more than 2.9 million mortgage payment deferrals to help homeowners during the pandemic. However, while lenders will continue to support those who are still struggling, some homeowners will also benefit from SMI.

Paul Broadhead, head of mortgage policy and housing at BSA, said:

“With the end of the leave scheme in a few days, unemployment is likely to increase. Without urgent modification of the SMI regime, the risk of home repossession could become a reality for many despite the best efforts of lenders.

“Without the reforms, we expect more public funds will be needed to provide housing allowances to former landlords who could not get the financial support they needed, when they needed it.”

Charles Roe, Director of Mortgages at UK Finance, said:

“The current wait time and eligibility criteria for the SMI are preventing struggling homeowners from getting much-needed help before their mortgage arrears start to pile up. As the leave regime comes to an end, we might see more people needing to use SMI. UK Finance and BSA are calling on the government to urgently review the program’s eligibility criteria and reduce the current wait time to more than nine months.

Jane Tully, director of external affairs and partnerships at Money Advice Trust, the charity that runs National Debtline, said:

“With the holiday ending on October 1 and with many people facing the risk of unemployment and reduced hours, access to support through universal credit and mortgage interest support will be crucial.

“However, for homeowners who are struggling to make their mortgage payments, the 39-week wait for SMI assistance risks building up arrears and potential repossession of their home.

“Mortgage borrowers caught off guard by the impact of Covid, need the government to act now by reducing the IMS wait to 13 weeks and changing the income rules under universal credit to ensure they can access the life support they need. ”



The two key questions are:

  1. Reduce the waiting time to access the SMI

Research[2]suggests that only 30 percent of households have enough savings to pay off their mortgage for two months, but the wait time for those eligible for the SMI is currently nine months. This means that homeowners could accumulate more than six months of arrears before receiving much needed support, making it significantly difficult to manage and resolve their financial difficulties.

Lenders are calling on the government to make changes that permanently reduce the SMI’s wait time to 13 weeks, as it was after the last financial crisis. For someone who lost their job during lockdown and is struggling to make ends meet, this change could make a real difference to their financial situation.

  1. Extend support to low-income homeowners

People must receive benefits such as Jobseeker’s Allowance (JSA) or Universal Credit (UC) to be eligible for SMI. But as people move from JSA to UC, the zero income rule means that they can no longer get the SMI if they are earning income from work.

Changing eligibility to include those with reduced income is not about keeping people in homes they cannot afford. This gives them time to reassess their financial situation and sell their property if necessary, while avoiding the trauma of repossession. Repossession is also likely to have a negative impact on an individual’s credit rating, leading to other long-term financial consequences.

One out of ten[3]homeowners said it was difficult to maintain their mortgage payments over the past year, with the main reasons including being on leave or having a reduced salary (34 percent) and working less ‘hours (31 percent).

We are asking that the zero income rule be removed from UC SMI’s eligibility criteria, so that people can work up to 16 hours per week without affecting their SMI claim. Also, since SMI is a loan and not a benefit, it does not need to be treated like other UC payments.

SMI payments are made directly to the mortgage lender and can be claimed up to £ 200,000 in mortgage (or £ 100,000 in mortgage for those on pension credit).

In 2016, the government extended the wait time for the IMS from 13 weeks to 39 weeks. Then, in 2018, a new change to the SMI changed it from an advantage to a loan that must be repaid with interest when the property is sold.


1. Mortgage Interest Assistance (SMI) is a loan provided by the Department of Work and Pensions (DWP) to support eligible homeowners who receive Income Assistance, Income Based Jobseeker’s Allowance (JSA) , Employment and Income Support Allowance (ESA), Pension Credit or Universal Credit (UC) provided they have no income. SMI payments are made directly to the mortgage lender and can be claimed up to £ 200,000 in mortgage (or £ 100,000 in mortgage for those on pension credit).

In 2016, the government extended the wait time for the IMS from 13 weeks to 39 weeks. Then, in 2018, a new change to the SMI changed it from an advantage to a loan that must be repaid with interest when the property is sold.

2. Social Market Foundation – Safe as Houses Report

3. The English housing survey from November to December 2020:


BSA Press Office
Tanya Jackson, External Affairs, Tel. : 07881 501098, [email protected]

UK Financial Press Office

Press office – 020 7416 6750, [email protected]

Notes to Editors

Paul Broadhead, Head of Mortgage and Housing Policy at BSA and Charles Roe, Director of Mortgages at UK Finance are available for an interview. Please use the contact details above to organize.

The Building Societies Association (BSA) represents the 43 UK building societies, as well as 6 credit unions. Mortgage companies have total assets of over £ 435 billion and, together with their subsidiaries, hold residential mortgages of over £ 338 billion, or 23% of total UK outstanding. They hold over £ 297 billion in retail deposits, or 17% of all such deposits in the UK. Construction companies represent 37% of all ISA cash balances. They employ approximately 42,500 full-time and part-time people and operate in approximately 1,470 branches.

UK Finance is the collective voice of the banking and finance industry. Representing around 300 companies in the industry, we act to improve competitiveness, support customers and facilitate innovation.


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