understanding SMI payment rules

[gwenlillian]

Hi, is anyone familiar with the rules for the DWP payments of mortage interest (SMI)? I have found the following information* but don't fully understand it. I am looking for the rule about paying interest on re-mortgages, entered into to clear arrears and therefore increasing the original mortgage loan. thanks

* “mortgage interest” means interest on a loan which is secured by a mortgage of or charge over land, or (in Scotland) by a heritable security, and which has been taken out to defray money applied for any of the following purposes, that is to say—

(a) acquiring any residential land which was intended, at the time of the acquisition, for occupation by the borrower as his home;
(b) carrying out repairs or improvements to any residential land which was intended, at the time of taking out the loan, for occupation by the borrower as his home;
(c) paying off another loan; or
(d) any prescribed purpose not falling within paragraphs (a) to (c) above;
but interest shall be regarded as mortgage interest by virtue of paragraph (c) above only to the extent that interest on that other loan would have been regarded as mortgage interest for the purposes of this section had the loan not been paid off;

[anmarj]

Re: understanding SMI payment rules

arrears have never been allowed as housing costs even in intial assessment, and they are not allowed even in reviews, it is not classed as an eligable part under the legislation. Not sure if I can get hold of a copy of the legislation at work, but will have a look.



http://scotland.shelter.org.uk/get_a...tgage_interest

Housing cost payments can help you pay all or part of the interest on your mortgage payments. They won't help you pay off the capital of your mortgage. You may also be able to get payments to help pay the interest on loans you took out for essential repairs or improvements to your home (for example for insulation, repairing dangerous faults or adapting your home if you are ill or disabled, or someone in your family is) or to buy your ex-partner's share in your home if you have separated. Again, you won't get help to pay off the loans themselves.

that is the extent of the assistance of SMI

[gwenlillian]

Re: understanding SMI payment rules

hi and thanks, so while I am on the subject and if you're having a look, do you know whether redemption fees added to the new mortgage count, or, what happens when arrears are capitalised to the mortgage, increasing it again? I have always held that paying interest on arrears and then paying it again when capitalised is a form of double recovery, but hey, that's a whole new can-o-worms.

[Openlaw15]

Re: understanding SMI payment rules

Hi, is anyone familiar with the rules for the DWP payments of mortage interest (SMI)? I have found the following information* but don't fully understand it. I am looking for the rule about paying interest on re-mortgages, entered into to clear arrears and therefore increasing the original mortgage loan. thanks

* “mortgage interest” means interest on a loan which is secured by a mortgage of or charge over land, or (in Scotland) by a heritable security, and which has been taken out to defray money applied for any of the following purposes, that is to say—

(a) acquiring any residential land which was intended, at the time of the acquisition, for occupation by the borrower as his home;
(b) carrying out repairs or improvements to any residential land which was intended, at the time of taking out the loan, for occupation by the borrower as his home;
(c) paying off another loan; or
(d) any prescribed purpose not falling within paragraphs (a) to (c) above;
but interest shall be regarded as mortgage interest by virtue of paragraph (c) above only to the extent that interest on that other loan would have been regarded as mortgage interest for the purposes of this section had the loan not been paid off;

'Your honour, the poor person whose mortgage we're now assisting via a loan (formerly mortgage interest) now has a property charge on it and, all things being equal for the benefit of the tax payer and the state in general, we as the government wish to sell the property as the occupier/ owners have either died through constant worry, or too sick to work and, we, millionaires, who are so out of touch with the poor vermin, now rightfully request that you order a sale so as to balance the state's books. Your sincerely, a spoilt millionaire who's never done a hard day's work in his privileged life except burden the poor for a hobby. PS Want a title, how does 'Sir sound?"

Update: tory scum now want an interest in you home: http://researchbriefings.files.parli...18/SN06618.pdf at page 24.......

"Loans will be repaid upon the sale of the property, or when claimants return to work. Payments will accrue interest at a rate tied to the Office for Budget Responsibility’s forecast of gilts."

Look at these words "to change SMI from a benefit to an interest-bearing loan, secured against the mortgaged property, from April 2018. Provisions to implement this scheme are contained within the Welfare Reform and Work Act 2016" according to Parliament."

Benefit - ie mortgage interest support for persons on certain benefits. From 2018, the term 'benefit' changes to loan secured against property. Does this sound like the government gets an interest in your property?

[gwenlillian]

Re: understanding SMI payment rules

hi and thanks, yes i knew about that change and the proposals for the future, i am just stuck on this thing about whether the higher mortgage that i carry now, which is an interest only product, includes that element of that interest, that paid off some arrears, a bank loan for home improvements, and it does look like, all the charges, fees, commission and exorbitant costs to change are not covered. I will have to find a way to extract all the elements therefore and get the old paperwork out. As for interest on capitalised arrear - would this count as a loan? seems so complicated

[anmarj]

Re: understanding SMI payment rules

Sorry not been able to get hold of the book, it was swiped over the weekend. I couldn't see any more at work either on our guide. I think the fees can be included but not 100% sure. Based what you have stated above, the home improvement could be allowable depending on what it was used for, and the original purchase price but arrears are not.

[gwenlillian]

Re: understanding SMI payment rules

hi and thanks for looking - it seems that redemption fees are taken into account but it is strange that there is no clear data out there on this matter, apart from that little bit I quoted originally which I took from the Social Security Act 1992.