The Department for Work and Pensions (DWP) is offering a new £812 loan that benefit claimants won't need to repay for two years, following a recent change in policy. The DWP's budgeting advances and loans are designed to assist with one-off expenses, such as the replacement of essential household appliances.
Starting from December 2024, the repayment term for new Budgeting Advance loans will be extended from the current 12 months to 24 months, effectively reducing the monthly repayment amount. The loans are interest-free.
Chancellor Jeremy Hunt highlighted the importance of these loans during his Spring Statement and Budget announcement on March 6 in the Commons, stating: "Nearly one million households on Universal Credit take out Budgeting Advance loans to pay for more expensive emergencies like boiler repairs or help getting a job."
He added: "To help make such loans more affordable, I have today decided to increase the repayment period for new loans from 12 months to 24 months."
Budgeting Loans are available to cover various costs, including furniture or household items like washing machines, clothing, footwear, rent in advance, moving house, home maintenance, improvements, security, travel within the UK, employment-related expenses, maternity, and funeral costs, reports Birmingham Live.
It can also assist with the costs of repaying hire purchase loans and loans taken out for the aforementioned items. If you opt for a budgeting advance, your Universal Credit payments will be reduced until the borrowed amount is fully repaid, currently over a 12-month period.
The sum you receive depends on your needs and will be determined in conjunction with your work coach. The DWP explained: "A Budgeting Loan is interest-free, so you only pay back what you borrow. The repayments will be taken automatically from your benefits.
"The amount you repay is based on your income - including any benefits you receive - and what you can afford. After you apply for a Budgeting Loan, you'll get an email, text or letter telling you if you've been offered a loan. This explains how much your weekly repayments will be if you accept the loan."
