Mortgage help from the government
Mortgage help from the government.
In the wake of the credit crunch and the current economic downturn the government has 3 different schemes it has introduced in order to offer mortgage help to struggling homeowners who have experienced a loss of income and now find it difficult to meet all of their mortgage payment commitment.
Mortgage Rescue Scheme
This scheme is typically aimed at homeowners who have had a large reduction in income but have the facility to make small monthly payments and homeowners who have minimal mortgage arrears. It may be that these homeowners also need to stay in the area due to work or school commitments, and council accommodation is limited in that area.
A mortgage rescue scheme is usually managed by the local housing authority. a Registered Social Landlord or an independent housing organization would purchase a proportion or all of a mortgage and rent back that proportion to the homeowner. The rent would be cheaper than moving to private rental property.
There are strict criteria as to who can take advantage of this scheme.
Homeowner Mortgage Support
The Homeowner Mortgage Support scheme is specifically aimed at homeowners who have hit a financial crisis through loss of income (e.g. redundancy) and cannot afford to make the full monthly mortgage payments, but are likely to improve that financial situation in the near future.
The homeowner is effectively allowed to defer up to 100% of the interest part of their mortgage for up to 2 years, but they will have to commit to paying monthly as much as they can afford. In some cases the lender will convert the mortgage to an interest only mortgage. The deferred amount will be added to the mortgage at the end of the 2 year period.
Support for Mortgage Interest
Support for mortgage interest is aimed at homeowners who are on income support, income based Jobseeker’s Allowance or an income related Employment and Support Allowance. Extra assistance with payment of the mortgage interest can be applied for. This extra assistance brought in on 5th January 2009 will be reviewed once the housing market starts to pick up.
As with all the schemes there are strict criteria to be met.
None of these schemes should be approached without seeking the proper professional advice from an expert in the first instance. It’s worth noting that fitting the criteria does not necessarily guarantee acceptance into any of the schemes.
