Think tank the Centre for Policy Studies has published a new report entitled ‘From SMI to Mortgage Support:
How to help struggling homeowners through the pandemic’.
The paper argues there is a short-term need to improve the Support for Mortgage Interest (SMI) scheme to support homeowners through the crisis – as happened in the wake of the financial crisis.
In particular, it urges that:
- The nine-month waiting period for SMI should be abolished so it is available from day one.
- The Government should encourage lenders to inform borrowers in arrears about the benefits of this scheme (and notify all those on the mortgage holiday of its existence). It should also encourage switches from repayment to interest-only mortgages where there is a risk of people losing their home.
- The first three months of SMI should be paid as a grant, not a loan, and the Government should charge no interest on the next nine months of any claim.
- The Government should be far more flexible in allowing people to claim SMI while moving into work, in order to remove the current cliff edge, and make it far more responsive to changes in people’s circumstances.
- There should be a two-year time limit on claiming SMI for non-disabled working age claimants.
An expanded form of SMI would, it argues, be not only more compassionate towards the families involved but more cost-effective for Government.