The government is being urged to make critical changes to its Support for Mortgage Interest (SMI) scheme to ensure thousands of households are helped before their financial situation deteriorates.
As it stands, struggling homeowners are left to wait 39 weeks to claim SMI, which could make their financial situation worse.
The Building Societies Association (BSA) and UK Finance are calling for two key changes to SMI to help these homeowners avoid their financial situation deteriorating by getting help sooner.
The pair have asked the government to permanently reduce the wait time to access SMI from 39 weeks to 13 weeks – to make sure help is given when people need it most. They have also asked to allow people on Universal Credit to claim SMI if they are working reduced hours.
“To support struggling homeowners as they adjust to their new normal, modifications to the SMI scheme are needed now,” BSA head of mortgage and housing policy, Paul Broadhead, commented.
“With SMI already restructured as a loan rather than a benefit, reducing the wait time and making the scheme more flexible would not only provide a compassionate response to those financially impacted as a result of the pandemic, it shouldn’t have a long-term impact on government expenditure.
“Without the reforms we are recommending, we expect more government funding will be required for the provision of housing benefits for former homeowners who were unable to get the financial support they needed, when they needed it.”
UK Finance director of mortgages, Charles Roe, added: “The wait time and eligibility criteria for SMI is preventing much-needed help going to struggling homeowners when they need it most – before their financial circumstances get worse and mortgage arrears start building up.
“We are calling on the government to urgently review the SMI scheme eligibility criteria to ensure those struggling with payments are not waiting over nine months before they can access this support.”
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