Support for Mortage Interest loans, bankruptcy and IVAs
Written answer gives details of the status of a legal charge secured over a claimant’s property as security for a Support for Mortgage Interest (SMI) loan -
[ Edited: 13 Mar 2018 at 01:00 pm by Daphne ]
The legal charge will rank below any pre-existing charges on the property including the mortgage. Pre-existing charge holders will always have priority in recovering their debt from the equity when a house is sold or in the event of bankruptcy and if the amount of equity available after the sale of the property is less than the amount due to be recovered the balance will be written off. Where a customer in receipt of SMI loan becomes bankrupt or enters an Individual Voluntary Arrangement (IVA) there is provision for SMI loan payments to continue if the claimant has a continuing liability to make mortgage repayments.