One of the less publicised benefits cuts announced in George Osborne’s emergency budget was the reduction of help with mortgage interest payments. One of the first cuts to have come into effect, from 1st October, assistance with mortgage interest fell from a set 6.08% to the Bank of England average, currently 3.67%. This months payment will reflect the interest rate on 1st August, which was 3.63%.
This assistance ( Support for Mortgage Interest or SMI) is payable to to those in receipt of means tested benefits including Income Support, Jobseekers’ Allowance, Employment and Support Allowance and Pension Credit.
The cuts in support will affect many disabled homeowners. At least 85,500 disabled people received SMI in 2009, forming 38% of total claimants (the DWP uses DLA receipt as the method of identifying if an SMI recipient is disabled).
Some will have been able to take part in schemes such as Shared Ownership, where they part own and part rent a property. Others may have become disabled since purchasing a house, and the interest help allowed them to stay in their home after becoming unable to work.
Many people in receipt of SMI pay higher interest rates than the average. The average SMI payment of £200 a month will drop to about £120 a month. Some disabled people have already reported losing upto £44 a week in help with paying their mortgage.
Another potential side effect occurs where SMI is paid as part of Income Support. A reduction in SMI payments could lead to someone losing all of their Income Support, which is a passport benefit. This would lead to loss of access to free prescriptions, legal aid etc.
This move is a giant leap backwards for opportunities for home ownership for those disabled people who are unable to work. Many will now have to sell their house, and are likely to end up claiming housing benefit. They may have to move from specially adapted housing to a less suitable or accessible home. They may join the many people on waiting lists for social housing. They risk losing a sense of independence, stability, and self determination and becoming wholly dependant on the state for their housing.