Support for Mortgage Interest Loan - How and when do I pay back the Support for Mortgage Interest Loan?

You have to pay back the loan and the interest added to it, when you sell or transfer ownership of your property providing there is enough equity left, unless you are selling your home and buying another within 12 weeks.  A charging order is placed on your property so that you have to pay it back when you sell it or transfer it to another person. There are some exceptions to this, such as if you transfer the property to your ex-spouse under a court order.

Interest is charged on the loan, which is added to the loan you have to pay back. Interest is charged based on the government’s rate of borrowing and that can vary (go up or down) during the life of your loan.

If you stop receiving the loan, because you are no longer on a relevant benefit, or you choose to stop the loan, interest will still be charged at a daily rate.

What happens if there is no money left when I sell my home?

If there is no equity available when the property is sold or ownership transferred, the loan is written off.  If there is some money available from the sale to pay towards the loan, but not enough to pay off the whole of the loan, then the money available goes towards paying off the loan and the rest of the loan is written off.  

If you are in mortgage arrears, then money from the sale will first go towards paying off the mortgage arrears. Only if there is money available after the payment of mortgage arrears, will it go towards the loan.

What happens if I don’t sell or transfer my home?

If you don’t sell or transfer ownership of your property, then you do not have to pay back the loan. However, if someone inherits the property from you, they will be liable to pay off the loan and accrued interest.

If your partner inherits the property from you, they will only be liable to pay off the loan and accrued interest if they sell or transfer ownership of the property.  

If anyone else inherits the property from you (e.g. an adult son or daughter or other non-dependant ), they will become liable to pay back the loan and the interest at the point that:

• You die, if you are single.
• The last surviving partner has passed away, if you are in a couple.

Can I pay back the loan before my home is sold?

You don’t have to make repayments of the loan unless you want to. 

However, if you wish, you can make payments off the loan if your situation improves. (The minimum payment you can make is £100, unless the total owed is less than that). However interest continues to be charged on the loan until it is paid off in full.

If you stop receiving the loan, because you are no longer on a relevant benefit, or you choose to stop the loan, interest will still be charged at a daily rate.

Can I decide to stop receiving the loan?

You can decide to stop receiving the loan at any point. However, interest continues to be charged at a daily rate until it is paid off in full.

Is taking out a loan my best option?

We can’t advise you on what you should do. You will be charged interest on the Support for Mortgage interest loan and a charge will be placed on your property. You should, therefore, get as much advice and information as possible and carefully consider your options.

No one will be able to predict how high interest rates will rise or fall; and how well the housing market will perform. If you are considering selling your property in the future, then the loan and interest will eat into any return you will get from it.

If you require help and support on this, you could try contacting the following organisations:

• England and Wales: MoneyHelper or Citizens Advice 

• Scotland: Citizens Advice Scotland

• Northern Ireland: Citizens Advice Northern Ireland 

You can also use our Find an Adviser tool, to find out what local advice exists in your area.