Several Government-funded measures are now available to help people who are finding it increasingly difficult to pay their mortgages as a result of the economic downturn.
If you need help, contact Shelter's dedicated homeowner helpline on 0300 3300 515 or use our directory to find face-to-face advice services in your area. An adviser can tell you what kind of help you may be able to apply for.
Homeowners Mortgage Support (HMS)
Under this new scheme, eligible owner-occupiers who are struggling to meet their mortgage payments will be able to defer paying part of the interest on their loans for up to two years, to give them time to get back on their feet.
This scheme is available to borrowers who are experiencing a significant but temporary loss of income.
The interest you don't pay during the deferral period will be added to your outstanding mortgage, and will need to be repaid eventually.
As an expert in housing advice, Shelter has been asked by the Government to advise homeowners on their suitability for this scheme. See our page on Homeowners Mortgage Support for more information.
Six month delay on repossession
Some banks, including Royal Bank of Scotland, NatWest, Bradford and Bingley and Northern Rock, have agreed to delay taking repossession action for six months, to give borrowers time to sort out their arrears.
However, if you know that your financial situation is not going to improve and you will no longer be able to afford your mortgage in the future, you may be better off selling your home voluntarily, rather than delaying and building up more arrears. Talk to a debt adviser if you're in this situation, as they should be able to help you work out the best course of action. Contact Shelter's dedicated homeowner helpline on 0300 3300 515.
Actions lenders should take before repossession
Since 19 November 2008, lenders are expected to take certain steps when borrowers fall into mortgage arrears, and only use repossession as a last resort.These steps are known as the pre-action protocol.
When the courts are deciding if they should repossess a borrower's home, they must consider whether or not the lender has taken these steps. This means that your lender should:
- provide you with information about the total amount of arrears, the outstanding balance on the mortgage, and details of any interest or charges that may be payable
- take steps to discuss the reason you're in arrears (whether the situation is temporary or long term), and what your financial situation is
- recommend that you to contact your local council, for advice
- consider reasonable requests to change the regular date of payment or method of payment
- discuss any proposals you make for repayment of the arrears, giving reasons in writing within 10 days if your proposals are not accepted, and allowing you reasonable time to consider any proposal they make to you
- give you 15 working days' notice in writing of their intention to issue a claim for possession, if you don't keep any agreement you make.
Changes to rules on support for mortgage interest payments
More struggling homeowners may be able to claim support for mortgage interest to help pay the interest on their mortgage, or on loans taken out to pay for repairs or improvements.
From January 2009, the following will apply:
- Support for mortgage interest payments will be available 13 weeks after you make your claim. This has been reduced from 39 weeks.
- Eligible homeowners can get help to pay the interest on the first £200,000 of their loan. This has been increased from the previous limit of £100,000.
Please see the section on support for mortgage interest for more information about the rules.
Making sale and rent back schemes ‘safer’
Until recently, private sale and rent back schemes (sometimes called 'mortgage rescue schemes') were completely unregulated, allowing unscrupulous companies to take advantage of struggling homeowners.
Following pressure by Shelter, and a recommendation by the Office of Fair Trading, an interim system for protecting consumers was brought in on 1 July 2009. However, extreme caution is still recommended if you are considering one of these schemes. They can be very risky and are usually best avoided. Please see our section on sale and leaseback schemes for more information about the issues you need to consider.
Government mortgage rescue scheme
The Government’s mortgage rescue scheme, or MRS, is a new initiative that aims to provide a safety net to up to 6,000 vulnerable households at risk of losing their homes through repossession. This scheme will be administered by participating local councils. The scheme is set up to work in two different ways:
- Some households will get a shared equity loan.
- others will be offered help from a ‘mortgage to rent’ scheme, whereby a local housing association buys their property and rents it back to them.
The mortgage rescue scheme will initially be tried out by a small number of local councils first before it is rolled out nationally. Please see our section on the Government mortgage rescue scheme to find out more.
Court desk scheme
Court desk schemes or 'duty advice desks' provide homeowners facing repossession with free legal advice and representation at court before a hearing. This advice is available to all, and is not means tested. You should always take advantage of this service if it is offered and you have not already sought advice about your case.
The Government has recently provided additional funding for the court desk scheme. There are now duty advice schemes currently operating in over 200 county courts in England and Wales, and they have been able to prevent immediate repossession in up to 85 per cent of cases.
