The impact of Universal Credit and mortgage interest on disabled people, women and single parents

Go to next case study

This is one of three case studies that looks at wider policy issues and includes a short discussion of an equality issue in welfare benefits that can affect individual clients. It also illustrates how wider equality social policy issues can be identified in welfare benefits work.

Case Study 7: How does the way Universal Credit (UC) treats mortgage interest disproportionally affect disabled people and women?

Download Case Study 7 (Word doc.)


Until April 2018, help with mortgage costs for people on some means tested benefits was available as a benefit. It changed to a loan on 6 April 2018. The scheme is known as Support for Mortgage Interest (SMI). This discussion looks at the impact of this policy change on disabled people and women, who are more likely to work part time and not receive other work allowances.


UC claimants who are paying a mortgage on the accommodation they live in are entitled to have the mortgage interest included as a loan in their maximum amount of UC. From 6 April 2018 any mortgage interest is paid as a loan with a charge put on the property.

However, this only applies as long as they are not doing any paid work and have served a waiting period of nine months and have not worked at all during that period. If they do any work at all, the household must restart the waiting period.

Although mortgage interest is not included once someone in the household does any paid work, the household is entitled to a higher work allowance (WA)* of £397 a month if the household includes dependent children or someone who is disabled. They would be entitled to the lower WA of £192 if they were renting but the rent would continue to be included in their UC maximum amount. A WA of £397 is worth an additional £250 a month. The lower WA of £192 is worth about £120.

* The work allowance is the amount of earnings that can be kept before your UC starts to be reduced by the taper.

So households with a mortgage and with someone who can earn at least £397 will receive an additional £130 (£250-£120). (This is to take account of the mortgage interest, unlike the rent, not being included in the UC maximum amount.)

However, disabled people and single parents are much more likely than other households to be only able to work part time and therefore not to be able to benefit from the higher WA. Because of the exclusion of the loan for mortgage interest from UC once a clamant has any earnings, a single parent or disabled person with a mortgage who wants to work even a couple of hours a week will find they have a much lower income than if they didn’t work at all.

Someone who earns £80 a month but who pays mortgage interest of £160 a month will have £80 a month less income as a result of working. Someone who has a fluctuating condition and wants to return to work during periods when their health is less bad will have to keep starting the long waiting period again before a loan for mortgage interest can be included. People contemplating a small part-time job or returning to work for a short period will need to consider if the loss of the loan will mean they are unable to pay the mortgage interest and so will put themselves at risk of repossession if they work.

This policy of stopping a loan of mortgage interest, and the need to re-serve a long waiting period as soon as any work is done, disproportionally affects disabled people and women.

More information about the policy impacts of Universal Credit and Support for Mortgage Interest

 House of Commons Briefing Paper Number 06618, 5 April 2018, April 2018, Support for Mortgage Interest (SMI) scheme

Equality and Human Rights Commission (EHRC) final research report, March 2018: The Cumulative Impact of Tax and Welfare Reforms

EHRC, March 2018: Effect of tax and welfare reforms: infographic and evidence review.




Share this