Some people may face a higher risk of repossession because they are getting too little support for mortgage interest (SMI) payments, it has been claim…
Some people may face a higher risk of repossession because they are getting too little support for mortgage interest (SMI) payments, it has been claimed.
Senior technical manager at mortgage brokers John Charcol Ray Boulger said the system of paying SMI according to the average mortgage interest rate is “completely ridiculous”.
He added: “By using an average – particularly at the moment when there is an even wider range of interest rates payable by borrowers than normal – it means that some people, even at the lower rate, are getting paid too much. Others are not getting paid enough.”
For those not getting paid enough, the situation may be a very difficult one, as this could mean the level of support they have is too little to curb the threat of being unable to pay their mortgage, making repossession more likely.
Mr Boulger proposed an alternative system by which each recipient of the benefit would be paid in line with the actual amount of interest being charged, a figure they can advise of on a month-by-month basis.
He argued this would be far better than “nearly everybody” getting the wrong amount.
Mr Boulger’s comments come days after new figures from the Financial Services Authority revealed there were 38,800 new cases of mortgage arrears in the last three months of 2010, a six per cent jump from the previous quarter.
It also noted the overall total of arrears cases was 343,400, although this figure was unchanged quarter-on-quarter and seven per cent lower than at the end of 2009.
By James Francis