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Acid In The Punch Bowl

Smi Cut... By A Tiny Amount.

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The change, will come into effect on 6 July 2015, means that on a £100,000 mortgage arranged over 25 years the amount that can be claimed each month will fall from £303 to £260.

Let's hope it shakes out some supply, with sellers more in need to accept offers. I recall the last SMI cut from some 6% down to 3.63%.

There was something like 5-6 months notice of it. Then it arrives and Shelter kicks up a fuss, and all those on it on MSE forum start telling of their shock at the change. You'd think they'd monitor the news for the house-protecting mortgage measure they were getting.

Mortgage benefit to be cut for 167,000 struggling households

About 167,000 homeowners, including 71,000 pensioners, who are struggling to pay their mortgage will see their mortgage benefit payments fall by a typical £756 a year from next month.

Under the Support for Mortgage Interest (SMI) scheme, the Government makes interest payments on the first £200,000 of outstanding mortgages for those who can't afford it. This is normally paid directly to the lender.

But from 6 July, the interest rate the Government pays will drop from 3.63% to 3.12%. It's been set at 3.63% since October 2010.

http://www.moneysavi...ling-households

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Good. Every little helps.

161,000 people claiming the support will lose out on means-tested benefit from July 2015

In other words 161,000 are sitting on properties they can't afford, funded by tax payers of course.

Methinks, SMI shouldn't exceed LHA and should be part of benefit cap. on the other hand in some areas some people may be getting less than LHA. Don't know what is the exact, current situation.

Edited by Fairyland

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ah but they are 'struggling' (heroically) households

'About 167,000 homeowners, including 71,000 pensioners, who are struggling to pay their mortgage will see their mortgage benefit payments fall by a typical £756 a year from next month.'

interesting that less than half are pensioners (who must be on pension credit to get any help - not all retirees then)

why don't they downsize - or is that too difficult for them to comprehend.

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ah but they are 'struggling' (heroically) households

'About 167,000 homeowners, including 71,000 pensioners, who are struggling to pay their mortgage will see their mortgage benefit payments fall by a typical £756 a year from next month.'

interesting that less than half are pensioners (who must be on pension credit to get any help - not all retirees then)

why don't they downsize - or is that too difficult for them to comprehend.

Because they've paid in all their lives and never wasted their money in iPads? Edited by Si1

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......why don't they downsize......

I wish the government would step in and help them do so. It makes no sense someone should be kept living above their means for no societal gain just because.

Hell if they just switched off the SMI tap that would achieve the same as the banks would help them to downsize. Get the banks to do the government's work for them. Big society and all that.

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May be the council will have to find an alternative accommodation for them if the tap is switched off. This may prove more expensive than monthly SMI payment in some areas?

For pensioners, they can certainly look into moving in smaller properties.

Yesterday a bungalow came up for sale, priced £430. The old man living there died last month. His son and daughter in law are the beneficiaries. They themselves look 70+ . So, the local council funded father's care l and the big house is left to the children?

Edited by Fairyland

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I think with any governments cuts, its not so much how much the first cut is, its more that its the first of a start of cuts.

They should have started rolling back 'Vote for me! Im a one-eyed scots tnuc' 5 years ago, but the Gordy economic disrupter field was still operating on full power.

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If they had done this a couple of years ago, they might not now be dependent on some rabid, swivel eyed loons for their majority.

Still, if this is the start of, and indicative of a trend for this parliament, there might, just might, be hope.

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So, before the cuts £606 per month was the max hand out to be fair. If this was/is in London it is still less than monthly rent to BTL LL. Would be good to see the regional distribution.

How many out of these 167,000 will loose their Bricks ?

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Why are they still paying a mortgage when they're retired?

DID THEY MEW?

Get the impression that it's only the original mortgage sum that can be put in the application for SMI.

MEW amounts not covered - except for the 'get-outs' such if you can show the MEW money was spent on necessary repairs/improvements, and/or a few other things (can't remember what).

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Mortgage benefit to be cut for 167,000 struggling households

About 167,000 homeowners, including 71,000 pensioners, who are struggling to pay their mortgage will see their mortgage benefit payments fall by a typical £756 a year from next month.

Under the Support for Mortgage Interest (SMI) scheme, the Government makes interest payments on the first £200,000 of outstanding mortgages for those who can't afford it. This is normally paid directly to the lender.

But from 6 July, the interest rate the Government pays will drop from 3.63% to 3.12%. It's been set at 3.63% since October 2010.

http://www.moneysavi...ling-households

Little by little.... markets move at the margin. Obviously the main thrust of HPCers is no oldies will look to downsize.

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It won't for much like longer though will it? A loan from this finance bill on as I remember?

Really???

I knew they were looking into it, but hadn't realised they were bringing it in.

2014

http://www.thisismoney.co.uk/money/mortgageshome/article-2569205/Is-DWP-planning-SMI.html

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the official line

If you qualify for Support for Mortgage Interest (SMI), you’ll get help paying the interest on up to £200,000 of your loan or mortgage. If you’re getting pension credit, this figure is £100,000.

If you’re already getting SMI and move to Pension Credit within 12 weeks of stopping your other benefits, you’ll still get help with interest on up to £200,000.

that is madness so if you are on SMI and reach PC age - it continues unabated for ever :o

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the official line

If you qualify for Support for Mortgage Interest (SMI), youll get help paying the interest on up to £200,000 of your loan or mortgage. If youre getting pension credit, this figure is £100,000.

If youre already getting SMI and move to Pension Credit within 12 weeks of stopping your other benefits, youll still get help with interest on up to £200,000.

Except they paid in all their lives!

that is madness so if you are on SMI and reach PC age - it continues unabated for ever :o

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Wow - thanks fru-gal. That's going to be interesting going forwards. Market participant response. I will have to do some more research, as in whether it will be the same for all existing claimants (I doubt it). Perhaps claimants from a cut-off date pre 2018. Anyway, it's a much fairer solution in my opinion. Forces people to take care, and to take action if necessary, in a market.

Not fully up to scratch on this SMI benefit, but from what I understand, this existing £200,000 SMI max limit can also be hiding a greater weakness.

Under existing SMI, this is my understanding (below). Some oldies could be hogging family homes, with fraction of outstanding mortgage debt being covered by SMI.

An old person in a £400k home with a 30k mortgage shouldn't be getting any SMI.

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It was and is AFAIK perfectly possible for someone ie one person or a couple in a £1,000,000 multi-bedroomed house with a £200,000 mortgage to get SMI forever if they are retired. This will change in 2018 ... for new entrants and may I guess also change to a loan for existing recipients.

Grrr, I would hope there are no such claimants on their books, but knowing people (eg BTLers), it would not surprise me if there were a few instances nearly that extreme.

All reminds me of Girly Girl ('hpcer') in 2008-09, for reasons I won't go deeply into, other than I recall they claimed on some Gov mortgage paying scheme, and I seem to recall them having to divest his redundancy money to qualify, spending hard on the house.

There were other schemes. Gov's 'Mortgage Rescue'. All to stop HPC. Then of course SMI got fast tracked soon after prices began to fall. From 26 weeks wait to become eligible to claim (if qualfiying), to 13 weeks? Something like that. And of course being a joke for anyone who had taken redundancy cover / saved a reserve - but mainly against renter-savers and patient upsizers. Dreams crushed, against other market participants and a massive HPI boom. Followed in many parts by even greater HPI to new peaks.

Been reading a few old HPC posts late 2008 and then into mid 2009, with London/SE HPCers people concerned prices stopped falling, and then going up. So sad. HPC

You'll all do what's right for you at the end of the day but whilst many people didn't make a fortune during the boom they just lived their lives equally very few will loose out during the bust.

Open your eyes and look at your right move saved list, I have 20 properties on mine and the only one that has been reduced needs knocking down and starting again but even that is still £350k needs at least £100k spending on it.

So lets consider which the government will do, have thousands of homeless people or print money hmmm I wonder

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