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AS 2012: Govt extends support for mortgage interest scheme until 2015

The Support for Mortgage Interest scheme, due to expire next month, has been extended until March 2015.

George Osborne 480

Borrowers that have been unemployed for 13 weeks are currently eligible for the support, which replaced the 39-week qualifying period in 2009, and the qualifying loan size increased to £200,000 from £100,000. Both were due to revert back in January 2013.

The extension of the SMI scheme will cost an extra £10m in 2013/14, followed by £95m in 2014/15 and £90m in 2015/16.

The autumn statement report states: “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.”

SMI used to be calculated at 6.08 per cent but in the emergency 2010 Budget it was cut by 40 per cent and since October it has been calculated at the Bank of England’s average mortgage rate, currently 3.63 per cent.

CML director general Paul Smee says: “We welcome the extension of the current arrangements for the support for mortgage Interest scheme until March 2015. These had been due to expire in January 2013 but today’s 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.”

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Comments
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  • Claire 11th February 2013 at 11:11 pm

    Why won’t the people renting be able to get housing benefit to help with their rent?

  • hooligan 8th December 2012 at 11:41 am

    I have a lot of capital and choose not to work. I receive no JSA or IS. Whilst I won’t claim for this benefit, I am thinking that I should avail myself of this “fiddle” and get a 100% mortgage and get hold of the capital to punt on shares and claim for SMI. Whilst I do have a lot of sympathy for those out of work (and those paying rent instead of mortgage interest who are getting no relief) I am conscious of the freebie being handed out. Is it even means tested?

  • Phil 7th December 2012 at 10:03 am

    what you mean protect your payments with ASU or PPI as all the ambulance chasers call it. No, lets get repossessed instead. See the product does have a use after all

  • Gavin Hodgson 6th December 2012 at 5:29 pm

    Couldn’t agree more with Judith – a very bad politically based decision. Also, the banks only give the best rates to existing homeowners with lots of equity (as they are low risk) those people with smaller deposits are paying significantly higher rates and this announcement does nothing there.

  • Gavin Hodgson 6th December 2012 at 5:28 pm

    Couldn’t agree more with Judith – a very bad politically based decision. Also, the banks only give the best rates to existing homeowners with lots of equity (as they are low risk) those people with smaller deposits are paying significantly higher rates and this announcement does nothing there.

  • Quentin Cooper 6th December 2012 at 1:10 pm

    Why does the government persist in propping up house prices?

    I rent and if I become unemployed there’s no support given to me over and above Job Seekers allowance to pay my rent.

    When someone buys a property they should take into account the fact that they might become unemployed and provision or be cautious accordingly. Perhaps this would have helped constrain the excessive risks that home owners have taken with the presumption that property values can only ever go up!

    A state of affairs that the politicians seem keen to preserve though it can’t be done forever and the sooner affordable property prices are established the better for everyone and the economy.

  • Judith B 6th December 2012 at 12:52 pm

    Oh no!!! Another reason for house prices to remain artificially high! This is very bad news.