The Support for Mortgage Interest scheme, due to expire next month, has been extended until 2015/16.
The extension of the scheme, announced in last week’s Autumn Statement, will cost an extra £10m in 2012/13, followed by £95m in 2013/14 and £90m in 2014/15.
The scheme is designed to provide short-term help to people suffering a personal crisis such as loss of employment or relationship breakdown and who are struggling to meet their mortgage repayments. SMI is available to certain benefit claimants and pays a proportion of their mortgage interest.
In 2009, the Government temporarily cut the qualifying period from 39 weeks to 13 weeks and extended the higher capital limit from £100,000 to £200,000 in response to the housing crisis. The changes were due to end in January.
The Autumn Statement says: “Temporary changes to SMI are extended until 2015/16 for working age SMI claims. The waiting period will remain at 13 weeks and the working-age capital limit will remain at £200,000 until 31 March 2015.”
In August, the Council of Mortgage Lenders urged the Government to continue the SMI extensions for another year. CML director general Paul Smee says: “The announcement provides a welcome extension of support for homeowners currently receiving income related benefits, as well as helping lenders to extend forbearance to those waiting to qualify.”