R05 Help with housing costs: free practice questions

1. Question 1 of 5

   How is Support for Mortgage Interest provided since 6 April 2018?

   Option A: As a non-repayable grant paid directly to the claimantOption B: As a reduction in council taxOption C: As a payment to the lender covering both capital and interestOption D: As a loan, repaid with interest on sale, transfer or death

   Show answer

   The answer is D: As a loan, repaid with interest on sale, transfer or death

   SMI is now a loan, repayable with interest when the property is sold, ownership is transferred or on death. A no-negative equity promise applies on death.

   Why the other options are wrong

   A

   SMI is now a loan, not a grant.

   B

   SMI isn't a council tax reduction.

   C

   SMI covers interest only, never capital.

2. Question 2 of 5

   How does Support for Mortgage Interest for Pension Credit recipients differ from that for working-age claimants?

   Option A: It is not available to pensionersOption B: It covers interest on loans up to £200,000, but only after a waiting periodOption C: Only the first £100,000 qualifies, with no waiting period or time limitOption D: It covers capital repayments as well as the interest due

   Show answer

   The answer is C: Only the first £100,000 qualifies, with no waiting period or time limit

   For working-age claimants, interest on up to £200,000 can be covered. For Pension Credit recipients, only the first £100,000 is covered, but with no waiting period or time limit.

   Why the other options are wrong

   A

   SMI is available to Pension Credit recipients, on different terms.

   B

   That describes working-age claimants; Pension Credit recipients get interest on only the first £100,000.

   D

   SMI never covers capital repayments, for pensioners or anyone else.

3. Question 3 of 5

   Which of the following is NOT covered by Support for Mortgage Interest?

   Option A: Interest on essential repairs to make the home fit to live inOption B: Interest on the house purchase loanOption C: Interest on arrearsOption D: Interest calculated at the standard rate

   Show answer

   The answer is C: Interest on arrears

   SMI covers interest on the house purchase element at a standard rate, and borrowing for essential works to make the property habitable. Interest on arrears and capital repayments are excluded.

   Why the other options are wrong

   A

   SMI can cover interest on borrowing for essential works to make the home habitable.

   B

   SMI does cover interest on the loan used to buy the home.

   D

   SMI is calculated using a standard rate of interest, so this is covered.

4. Question 4 of 5

   Who can now make a new claim for Housing Benefit?

   Option A: Only full-time students living away from their family homeOption B: Anyone renting from a private landlord on a low incomeOption C: Only homeowners who have a mortgage and a low incomeOption D: Those over SPA, or in temporary, sheltered or supported housing

   Show answer

   The answer is D: Those over SPA, or in temporary, sheltered or supported housing

   Housing Benefit is being replaced by Universal Credit. New claims are limited to those who have reached SPA and those in temporary, sheltered or supported housing.

   Why the other options are wrong

   A

   Full-time students aren't the group who can still make new claims.

   B

   Most private renters now claim Universal Credit instead.

   C

   Housing Benefit doesn't help homeowners with mortgages.

5. Question 5 of 5

   Uma receives Universal Credit and qualifies for Support for Mortgage Interest. Her mortgage is £260,000. Using the standard rate of 3.66%, how much interest a year will SMI cover?

   Option A: £610Option B: £3,660Option C: £7,320Option D: £9,516

   Show answer

   The answer is C: £7,320

   SMI covers interest on up to £200,000 of mortgage borrowing at the standard rate: £200,000 × 3.66% = £7,320 a year. It is paid as a loan and never covers capital repayments.

   Why the other options are wrong

   A

   £610 is roughly the monthly amount, not the yearly one.

   B

   £3,660 uses the £100,000 limit, which is for Pension Credit recipients.

   D

   £9,516 applies the rate to the whole £260,000; SMI only covers up to £200,000.

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