Less than 900 support loans were repaid in full last year as the total debt pile continues to grow
Government loans taken out through the Support for Mortgage Interest (SMI) scheme are rarely being repaid, with new data showing only a tiny fraction of borrowers clearing their debts each year.
The scheme, administered by the Department for Work and Pensions (DWP), offers loans to households where at least one member receives benefits — including universal credit, income support, jobseeker's allowance, employment and support allowance, or pension credit — and who are at risk of falling behind on their mortgage.
Figures obtained via a Freedom of Information request by The Times show that of 34,757 loans outstanding at the start of 2025, just 897 were repaid in full by the year's end, a rate of 2.6%. Since 2020, an average of 1.7% of outstanding loans have been settled annually. The total number of loans in force has grown from 21,689 in November 2020 to 34,757 in November 2025.
"SMI is designed as a long-term loan to help people remain in their homes during periods of financial difficulty," the DWP said. "As loans do not have to be repaid until the recipient sells their property and given that the loan scheme was introduced in 2018, annual repayment levels are expected to remain relatively low at this stage."
Repayment has been particularly weak during periods of economic stress. In 2020, only 105 loans — 0.5% of the total — were settled. In 2023, the year following the Truss administration's mini Budget, which sent mortgage rates sharply higher, just 112 loans (0.4%) were cleared.
Borrowers are required to repay the principal to the government with interest, currently set at 4.6%, when they sell or transfer ownership of their property. Interest accrues annually until the loan is discharged, reducing the equity borrowers realise on sale.
"While lots of people will try to avoid the scheme because it is a loan, this does suggest that more people are in need of this support," David Hollingworth (pictured right), associate director of mortgage broker L&C Mortgages, told The Times.
The loans, which are typically paid directly to the lender, average £70.30 per week, or around £281 per month, according to DWP data. The interest rate is calculated from Bank of England statistics on average mortgage rates.
Of those who took out SMI loans in the three months to November 2024, 85% were on universal credit and 12% were receiving pension credit, which supplements income for those above state pension age to a guaranteed minimum of £238 per week.
Take-up has risen partly as a result of eligibility changes introduced in April 2023. The waiting period for universal credit claimants was reduced from nine months to three months, and from May 2023, those receiving in-work benefits also became eligible.
The scheme, which has existed in various forms since 1948, was originally a grant that did not require repayment. It was restructured as a loan by the Conservative government in 2018. Loans can cover interest on mortgage balances up to £200,000 for working-age claimants and £100,000 for pension credit recipients.
"Ideally you would get rid of the loan as soon as you can or you face a bigger sum when you come to sell than you imagined," Hollingworth said. "This is still something of a last resort, it can be a useful safety net but, being a loan, it comes with strings."
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