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Home Ownership: Who Benefits?

Publish date: 1st July 2010

Naturally we’re keeping a close eye on any changes that may have an impact on the people we help and, in the recent ‘emergency budget’, possible amendments to the SMI rate (Support for Mortgage Interest – the benefit that pays our buyers’ interest only mortgages) were outlined. Basically there is a proposal to change the SMI rate from its current emergency rate level of 6.08% to one that follows the Bank of England’s published Average Mortgage rate. 

What will be the potential impact on homebuyers with a disability? Here’s a quick guide:

Existing homeowners – the changes won’t have an impact on existing homeowners as their rates have been ‘locked in’ for the duration of their mortgage.

People currently buying but who still haven’t completed – the changes being proposed may have an impact on this group, so we’re urging them to complete as quickly as possible.

Future buyers – looking at the ‘worst case’ scenario, with a lower SMI rate our lenders will no longer be able to profitably provide the mortgages that our buyers rely upon. As a result it may be necessary for future buyers to make a small monthly contribution. This should equate to as little as £25 per week (based on a £100,000 mortgage). If this were to happen we’re hopeful that the Government would recognise that many of our buyers are unable to work and would offer some additional form of support. We must also stress that this is a ‘worst case’ scenario, until we know the Government’s intentions we cannot say what will happen for certain. It is perfectly possible that SMI rates will remain at a level that still enables our lenders to profitably provide mortgages, in which case buyers won’t need to make a monthly contribution at all. However as a responsible business we’re keen to point out the possible implications of the changes as early as possible.

We’re living in extraordinary economic times so things may continue to change but please rest assured that home ownership for people with a disability is here to stay and, whatever happens, we will find and lobby for workable solutions that meet everyone’s needs.  

In the meantime, if you would like to discuss any of the issues raised in this news story, please don’t hesitate to contact us.

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