The Government has extended temporary changes to its Support for Mortgage Interest scheme, which helps borrowers struggling to pay their mortgage, for another year.
The scheme works by covering eligible interest payments on mortgages and some home improvement loans for borrowers receiving income-related benefits.
From January 5, 2009 changes to SMI were made on a temporary basis to reduce the waiting period from 39 or 26 weeks to 13 weeks; and to increase the limit on eligible mortgages from £100,000 to £200,000. A two-year time limit was also introduced for receiving SMI for those claiming Jobseeker’s Allowance.
These changes were due to expire on January 5, 2011. But as part of the comprehensive spending review the Government has extended these changes to January 4, 2012.
Extending the changes to SMI payments will cost the Government £70m in the financial year 2011/2012 and £20m in 2012/2013.
The Council of Mortgage Lenders has welcomed the extension.
In a statement today, the CML says: “The £200,000 limit on mortgage size and the 13 week waiting period will now remain in place until January 2012. The CML trusts that the Government will review the housing market conditions before that point and decide on whether further continuation would be appropriate.
“According to the Government, this will cost £90m over the next two years – a modest sum in the overall scheme of public expenditure, but a reprieve that will come as a relief to those households which, through no fault of their own, lose their income and their ability to meet their mortgage obligations.”