Reduction in interest rate charged on Loans for Mortgage Interest

The Department for Work and Pensions has confirmed that the interest rate used to calculate interest due on loans for mortgage interest (LMI) has reduced from 1.7% to 1.5%. The interest rate used to calculate the amount of LMI paid to a claimant's lender remains unchanged at 2.61%. 

What is a loan for mortgage interest?

Since April 2018, any benefit payments made to an eligible homeowner to assist with interest payments due to the mortgage on his or her home are made in the form of an interest-bearing loan. Prior to this date, the interest support was received as part of the claimant's benefit package and was not repayable. 

The loan is repayable when the property is sold or on the death of the claimant, at which stage the full amount paid towards the claimant's lender along with any interest due must be paid back to the Department for Communities. 

Homeowners who are struggling to keep up with mortgage payments should seek advice as soon as possible. Housing Rights can explain the options available to such homeowners and can represent homeowners facing legal action from mortgage lenders.