Without the help available through SMI, a claimant would either have to sell their home or have it repossessed if they could not keep up with mortgage payments.
However, SMI is not meant to be a long-term solution to homeownership, it is in place to provide help to those people who, through an unfortunate change in circumstances, are having short-term problems with their mortgage payments.
The Government is therefore asking experts and the wider public for their views. In particular, Ministers are keen for views on:
• Whether it is right for future new claimants of SMI to receive support indefinitely without the taxpayer having an opportunity to recoup some of those costs to help others in need; and,
• If after a fixed period of time, new claimants who want to continue receiving support should do so in exchange for a charge being levied on the property which would be paid back to the taxpayer upon its sale.
Lord Freud said:
"The current system of SMI payments does not encourage people to get on top of their own finances. It is also not sustainable. Even with today’s low interest rates it costs Government £400million a year.
"We are committed to supporting homeowners to stay in their own homes when times are hard. But in the future this type of support must be fair and affordable so we are seeking views from experts and the wider public, including options for putting a charge on the homes of future claimants so when they sell up we can recoup some of the costs."
As a core principle, the Government would look at a charge based on the amount of support provided.
This approach would give future claimants continued security in their homes – knowing that they will receive help from the Government towards their mortgage costs.
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