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21 October 2010

Support for Mortgage Interest scheme extended

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by Gill Montia

Support for Mortgage Interest scheme extended

The Council of Mortgage Lenders (CML) has welcomed the extension of the temporary concession on the Government’s Support for Mortgage Interest (SMI) scheme, announced in the Comprehensive Spending Review.

The scheme allows some borrowers in financial difficulties to defer part of their mortgage repayments until their circumstances have improved and the £200,000 limit on mortgage size and 13 week waiting period for applicants will now remain in place until January 2012.

The CML is also hopeful that ministers will review housing market conditions nearer the time and decide whether or not the new cut off point is appropriate.

The extension will cost £90 million over the next two years but according to the CML, is a worthwhile reprieve for “households which, through no fault of their own, lose their income and their ability to meet their mortgage obligations”.

However, borrowers eligible for SMI have already been burdened with a cut in the rate at which the benefit is paid.

The SMI rate was frozen at a generous 6.08% in late 2008 but from the beginning of October, it was set at the level of the Bank of England’s published Average Mortgage Rate, currently 3.63%.

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