Help to pay mortgage interest
This content applies to Scotland only.
Housing laws vary between Scotland and England. Get advice relating to England
If you are claiming benefits, you may be able to get help with your housing costs, including mortgage interest and interest on loans you have taken out for repairs or improvements.
Who can get help with housing costs?
If you own your home, the following benefits can include payments towards your housing costs, including mortgage interest:
- income support
- income based jobseeker's allowance
- income related employment and support allowance
- pension credit (appropriate minimum guarantee).
What housing costs can I get help with?
Housing cost payments can help you pay all or part of the interest on your mortgage payments. They won't help you pay off the capital of your mortgage. You may also be able to get payments to help pay the interest on loans you took out for essential repairs or improvements to your home (for example for insulation, repairing dangerous faults or adapting your home if you are ill or disabled, or someone in your family is) or to buy your ex-partner's share in your home if you have separated. Again, you won't get help to pay off the loans themselves.
Are there any restrictions?
The following restrictions apply:
- You can only claim support for mortgage interest on loans of up to £200,000. (This increased from £100,000 on 5 January 2009.) If your loan is bigger than this, you will have to pay the interest on any amount over £200,000 yourself. If you were already receiving support for mortgage interest before 5 January, you can only claim for interest on loans on £100,000. The new limit will not apply to you.
- If you got your mortgage after you started claiming benefits, you may not be eligible. If you are disabled or buying a home for someone who is disabled, this rule does not apply. Loans for essential repairs or improvements may be covered even if you took them out after you started claiming benefits.
- If you already had your mortgage, but increased it after you started claiming benefits, you will only get interest payments on the amount you originally borrowed.
- The interest payments you receive are calculated by the Department of Work and Pensions (DWP) with reference to the Bank of England base rate. The DWP's rate may not be the same as the interest rate you are paying. If you are paying a higher rate of interest, you will have to make up the difference yourself.
- If you're receiving income based jobseeker's allowance, you'll only be able to claim help with housing costs for 104 weeks (two years).
You can't get any money to cover the capital you originally borrowed, or any investment that is linked to your mortgage (such as an endowment policy, pension or ISA). You can ask your lender for a statement of your mortgage costs, and how much of what you pay is interest.
How do I claim?
When you apply for income support, income based jobseeker's allowance, income based employment support allowance or pension credit, you will need to include information about your mortgage and housing costs in order to get the extra payments. You will have to provide proof of your income, details of your financial situation and any related paperwork. Your lender will have to complete some of the forms confirming the details of your loan. The section on benefits has more on how to apply.
If you are already receiving these benefits but are not getting any extra payments towards your housing costs, contact your local Jobcentre Plus office or the Pension Service and ask them to send you a form.
If you need help applying, get advice from a Citizens Advice Bureau or other welfare rights agency. Use the Advice Services Directory to find help near you.
When will I get the first payment?
People over 60 who are claiming pension credit are entitled to help immediately, but there are waiting periods for everyone else. If you took out your mortgage after 2 October 1995, payments normally won't start until 13 weeks after you started claiming income support or income based jobseekers' allowance.
This waiting time (called the 'qualifying period') was reduced from 39 weeks on 5 January 2009. For people who have already applied for help and are in the qualifying period, this means that:
- if you have already waited 13 weeks by 5 January 2009, you will get support for mortgage interest on the first day of the first benefit week after that date
- you will get support for mortgage interest on the first day of the first benefit week, 13 weeks from the date you applied.
The rules about waiting periods are complicated, so talk to an adviser if you're unsure about your situation.
How is it paid?
Payments to help with mortgage interest are usually paid directly to your lender at the end of every four weeks. This is the case even if your mortgage payments are due on a monthly basis, so you may appear to be behind with payments.
If you are separated and it is possible for you to receive some help with mortgage payments from your ex-partner, you will need to get advice as to how these payments are to be made. They may affect the amount of benefit you are entitled to.
How long for?
If you are receiving jobseeker's allowance and you claimed after 5 January 2009, you will only be able to claim help with housing costs for up to two years. There is no time limit if you claimed before that date or are receiving income support, pension credit or income-related employment and support allowance.
How much will I get?
If your home is considered to be too expensive or too large for your needs, any payments you receive may be reduced to cover the costs you would have if you could reasonably be expected to move to a more affordable home. If you are in this situation, get advice. It may be possible to show that it is not reasonable to expect you to move somewhere else.
The amount that you get will depend on the standard rate set by the DWP at the time. If your mortgage interest rate is lower than the standard rate, all of the interest will be covered, but if it is higher than the standard rate, you will have to pay the difference from any income or savings you may have. It might be possible to negotiate with your lender if the difference is very small and you will be able to pay it off soon.
What is mortgage interest run on?
If your situation changes and you start working, take on extra hours or your pay increases, and you are no longer eligible to claim benefits, you can get an extra four weeks of money to help pay your housing costs. This is called mortgage interest run on (MIRO). You can find out more about MIRO at the Direct.gov website.
What about housing benefit?
Housing benefit only covers rent payments, so you can't claim HB to pay your mortgage. However, if you bought your home through a shared ownership scheme, you may be able to get HB to help pay the rent on the share you do not own.
Where can I get help?
The rules surrounding payments for housing costs are complicated. If need help or advice about claiming payments or any other benefits, contact your nearest Citizens Advice Bureau, or use the Advice Services Directory to find another advice centre in your area.