Benefits & Property Guide · 2026/27

Support for Mortgage Interest (SMI): How the DWP Loan Works

Since 2018, help with mortgage interest for benefit claimants has been a repayable loan, not a payment. This guide explains who qualifies, the waiting period, how much it covers, and how — and when — it must eventually be repaid.

Last updated: 3 July 2026Last reviewed: 3 July 2026How we verify

From Benefit to Loan: What Changed in 2018

Until April 2018, eligible claimants received Support for Mortgage Interest as a straightforward benefit payment made directly to their lender. Since then, it has been restructured as Support for Mortgage Interest (SMI) — a loan, secured as a second charge on the property, which must eventually be repaid with interest.

The mechanism for calculating the help is broadly the same — a standard interest rate applied to a capped amount of your outstanding mortgage — but the money is now a debt against your home rather than a payment you never have to repay.

Who Can Claim SMI

You may be eligible for SMI if you own the home you live in and you (or your partner) receive one of:

Universal Credit
Pension Credit
Income Support
Income-based Jobseeker's Allowance
Income-related Employment and Support Allowance

It covers interest on the mortgage used to buy your home, and in some cases on loans taken out for certain essential home repairs or adaptations, up to a capped total loan amount set by the DWP.

The Waiting Period

Working-age Universal Credit claimants generally serve a 9-month waiting period from the point their claim starts (or from when their earnings drop, if that is later) before SMI payments begin. This reflects the assumption that most claims are short-term and that other support, such as a payment holiday agreed with your lender, may bridge the gap.

Pension Credit claimants are generally not subject to the same waiting period, reflecting the different, typically longer-term nature of pension-age claims.

How Much SMI Covers

SMI is calculated using a standard interest rateset and periodically reviewed by the DWP — not your lender's actual mortgage rate — applied to your outstanding capital balance, subject to a capped mortgage amount. Check the current standard rate on gov.uk, as it moves broadly in line with average mortgage rates.

Crucially, SMI only ever covers interest. If you have a repayment mortgage, the capital repayment portion of your monthly payment is not covered and you remain responsible for finding that amount yourself, or agreeing a temporary arrangement with your lender.

How and When the Loan Is Repaid

SMI is registered as a second charge on your property, in a similar way to a second mortgage. You make no monthly repayments while you continue living in the property. The loan, plus interest that has accrued on it, is repaid from the sale proceeds when:

You sell the property
Ownership transfers, for example after death
You move permanently into residential care

You can also choose to repay the loan earlier voluntarily, in part or in full, without penalty.

Alternatives to Consider

Because SMI is a debt against your home, it is worth weighing it against other options first: a temporary payment holiday or reduced-payment arrangement agreed directly with your mortgage lender, switching temporarily to interest-only, or seeking free debt advice if wider financial difficulty is the underlying issue. Use our Budget Planner to see how different options affect your monthly outgoings before deciding.

FAQs

What is Support for Mortgage Interest (SMI)?

SMI is a loan, not a grant, from the DWP that helps homeowners on certain means-tested benefits cover the interest portion of their mortgage. It was changed from a benefit payment to a repayable loan secured against the property in April 2018.

Who can claim SMI?

You can generally claim if you (or your partner) receive Universal Credit, Pension Credit, Income Support, income-based Jobseeker's Allowance or income-related Employment and Support Allowance, and you own the home you live in with an outstanding mortgage or eligible home-improvement loan.

How long is the waiting period?

For most working-age claimants receiving Universal Credit, there is a 9-month waiting period from the start of your claim (or from when you stop working, if later) before SMI payments begin. Pension Credit claimants generally have no waiting period.

Does SMI cover the full mortgage payment?

No — it only covers interest, calculated using a standard interest rate set by the DWP (not your actual mortgage rate), up to a capped mortgage balance. It does not cover any capital repayment element of a repayment mortgage, so you must still find that portion yourself.

Do I have to repay the SMI loan?

Yes. SMI is repaid, with interest, when the property is sold or ownership otherwise transfers — for example on death or moving into a care home permanently. It is registered as a second charge on the property, similar to a second mortgage, but you make no monthly repayments while you remain living there.

What happens if I refuse the loan?

You are not obliged to accept SMI. If you decline, you receive no help with mortgage interest through the benefit system, but you will not build up a repayable charge against your home. Many claimants weigh the loan against other options, such as a payment holiday or lender forbearance arrangement.

Does SMI affect the amount of benefit I receive?

No — SMI is a separate loan facility and is not deducted from your Universal Credit, Pension Credit or other qualifying benefit. It is paid directly to your mortgage lender to cover the interest element, on top of your normal benefit entitlement.

Does interest keep accruing on the SMI loan while I live in the property?

Yes. Interest accrues on the outstanding SMI loan for as long as it remains unpaid, so the total amount owed can grow over the years you receive it, even though you make no monthly repayments while you stay in the home.

Can SMI leave me with negative equity when I sell?

It is possible in principle, since the loan plus accrued interest is repaid from sale proceeds alongside your main mortgage. In most cases there is enough equity to cover it, but if property values fall or the loan runs for many years, the combined debt could approach or exceed the sale price.

Do I need independent financial advice before accepting SMI?

The DWP requires you to get independent advice (often free, arranged through the DWP) before an SMI loan can be approved, so you understand the terms, the interest charge and how repayment on sale will work.

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The CalcHub Editorial team researches, writes and reviews every calculator, guide and article published on CalcHub.uk. Our remit is to translate the rules that govern UK personal finance — income tax bands, National Insurance thresholds, stamp duty slabs, Ofgem price caps, NHS health metrics, DVLA road-tax bands — into tools and explanations that anyone can use in under a minute. Every figure we publish is traced to a primary source: HMRC, Revenue Scotland, the Welsh Revenue Authority, Land & Property Services NI, DWP, Ofgem, the Bank of England, ONS, NHS or DVLA. We cross-check our calculator outputs against HMRC reference calculators to within £1 of accuracy where they exist, and against worked examples in legislation where they do not. The team conducts a full content review every 6 April when the UK tax year turns over, with event-driven updates within 7 days of a Budget, Autumn Statement, MPC base-rate decision or new Ofgem price cap. We do not sell financial products, take affiliate commission on regulated products, or accept payment for editorial placement. Our full editorial standards, sources list and corrections policy are published on the Editorial Policy and Sources pages.

All figures cross-checked against HMRC and gov.uk
Annual review every 6 April
Event-driven updates within 7 days of fiscal announcements

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Disclaimer: This guide is general information, not financial or legal advice. SMI rules, the standard interest rate and capped loan amounts are reviewed periodically — always check the current figures on gov.uk or with Jobcentre Plus / Pension Service before relying on them.