Owner-occupiers, who are leaseholders, can get help with service charges paid as a housing element within Universal Credit. You normally have to serve a waiting period of approximately nine months from the date of your Universal Credit claim, before you can receive this help.
However, help with mortgage interest payments is now in the form of a loan on which you will be charged interest. Please read our Support for Mortgage Interest Loan guide for more detailed information about this loan. Here are a few details:
Maximum loan amount
There is an upper limit on the total loan amount that can be included in your claim. The upper loan limit is £200,000. Your housing costs element will therefore be based on your total loan amount owed, or £200,000, whichever is lowest.
Standard Interest rate
The Support for Mortgage Interest Loan, which is help with interest payments on mortgage, home purchase loan, or qualifying home improvement loan, are calculated using a standard rate of interest, not your lender’s actual interest rate for your loan. This means that if your interest rate is higher, there may be a shortfall between the help provided and your contractual payment.
The current rate of interest used when calculating help with housing costs is 2.61%.
Calculation
Your housing costs element will be your loan amount owed (or £200,000) multiplied by the standard interest rate, divided by twelve in order to get the monthly amount.
There are restrictions on the help provided if your mortgage or loan was taken out or increased after you became entitled to Universal Credit, or if your housing costs are deemed excessive.
Waiting period
You will not receive a housing costs element for the first nine months after qualifying to have one included in your award. This is called a 'qualifying period'.
If you were receiving Jobseeker's Allowance or Employment and Support Allowance immediately prior to your Universal Credit claim, the time spent on that benefit can count towards your qualifying period.
Repaying the loan
Support for Mortgage Interest Loans together with the interest charged on the loan has to be repaid upon the sale or transfer of ownership of a claimant’s house. Please read the repayment section of our Support for Mortgage Interest Loan guide for more information.
Service charges
Universal Credit claimants will be able to get help with some eligible service charges through the housing costs element of Universal Credit. This is a part of your Universal Credit and is not a loan.
Updated May 2019