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Budget: Support for mortgage interest payment to become loans

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Support for mortgage interest payments will become a loan instead of a benefit, the Chancellor has announced.

In his Budget speech today, George Osborne announced the change as part of £12bn in welfare savings.

Currently, homeowners receiving certain income-related benefits can be paid a benefit to cover the interest payments on their mortgage, which is paid direct to the lender.

The benefit is available on mortgages of up to £200,000. On 6 July, the standard interest rate used was reduced from 3.63 per cent to 3.12 per cent.

The Government says new benefits under the scheme will become loans from April 2018.

Loans will be repaid upon sale of the house or when the claimant returns to work. Payments will accrue interest at a rate tied to the Office for Budget Responsibility’s forecast of gilts.

The Government is also increasing the waiting period to claim mortgage interest payments from 13 weeks to 39 weeks.

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