Mortgage grants - are you eligible?

The economic downturn has left many people in the UK unemployed and concerned about keeping up payments on their homes. The government does offer some support in the form of mortgage grants payments to help with interest on home loans.

Visit the benefits and tax credits pages at www.direct.gov.uk to check details of payments, and discover whether you are eligible for this kind of assistance.

Homeowners who receive certain income-related benefits could qualify for help towards mortgage interest payments. This is called Support for Mortgage Interest (SMI) and is normally paid directly to the mortgage lender.

Anyone receiving Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance or Pension Credit may get help. These payments can only be used to pay off interest on a loan, and cannot be used to repay capital or mortgage arrears.

Note that there is a limit of 2 years for SMI payments if you are claiming Jobseeker's Allowance. The amount of payment is calculated by using the Bank of England monthly average mortgage interest rate, presently 3.63%. If the homeowner is lucky enough to have a mortgage deal with a lower rate of interest, the surplus payment can be credited to the mortgage account.

If you have a capital and interest repayment mortgage it is often possible to switch to an interest only payment plan, which will considerably reduce your monthly payments, and perhaps cover them entirely with the mortgage grants SMI payments, although it will obviously leave you owing the full outstanding loan.

It may also be possible to arrange a mortgage holiday, where you are able to defer payments for a few months. Take advice immediately when you think you might face difficulties making payments.

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