UK Finance and BSA urge govt to change SMI scheme

UK Finance and the Building Societies Association (BSA) are calling for changes to be made to the Support for Mortgage Interest (SMI) scheme, to help struggling homeowners as the furlough scheme draws to a close.

The SMI is a government loan scheme which helps homeowners who are in receipt of benefits, although as it stands they must wait 39 weeks to claim.

The government’s furlough scheme, now just two weeks away from closing, has protected millions of people from significant financial difficulties during the pandemic. UK Finance and the BSA are now calling on the government to reduce the wait time for accessing the SMI scheme from 39 weeks to 13 weeks, to make sure help is given when people need it most.

Both bodies have also called for the government to allow people on Universal Credit to claim SMI if they are working on reduced hours.

UK Finance suggested the changes would have a “very limited impact” on the government purse, but a “huge impact” on the households that will benefit.

“The current wait time and eligibility criteria for SMI is preventing much-needed help going to struggling homeowners before their mortgage arrears start building up,” commented UK Finance director of mortgages, Charles Roe.

“As the furlough scheme comes to a close, we may see more people needing to use SMI. UK Finance and the BSA are calling on the government to urgently review the scheme’s eligibility criteria and reduce the existing wait time of over nine months.”

BSA head of mortgage and housing policy, Paul Broadhead, added: “With the end of the furlough scheme only days away, there is a likelihood that unemployment will rise. Without urgent modification of the SMI scheme the risk of home repossession could become a reality for many despite the best efforts of lenders.

“Without the reforms, 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.”

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