Back to top of page...

Introduction

The Government has unveiled a new £200m package of measures designed to prevent some of the most vulnerable families losing their homes and experiencing the trauma of repossession.  This scheme is aimed at those who are at risk of becoming homeless because they are struggling to pay their mortgage and is subject to a complex eligibility criteria.  Under the scheme, we'll be working with our own Registered Social Landlords (RSL), lenders and debt advice agencies to find ways of keeping people in their homes.

Please read the Frequently Asked Questions and contact us if you think you might be eligible.

Back to top of page...

Frequently Asked Questions about the Mortgage Rescue Scheme

How do people apply?
Households in financial difficulty, at risk of repossession and threatened with homelessness should speak to their lender in the first instance as there may be some scope for payment holidays or reduced payments.  Further advice and support is available from us but only after this first option has been explored.

What are the eligibility criteria?
We will assess you for 'homelessness assistance' which means your household must include someone with 'priority needs' as defined in the Housing Act 1996 (and Priority Needs Order 2001):

• a pregnant woman or a person with whom she resides or might reasonably be expected to reside
• a person with whom dependant children reside or might reasonably be expected to reside
• a person who is vulnerable as a result of old age, mental illness or a handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside

The following criteria will also apply:

• all owners of the property must agree to being considered for the mortgage rescue scheme
• equity owned in the property must be worth enough to cover priority debts and living in the property must be sustainable after mortgage rescue
• the household must have a clear need to stay in the area and it is not practical for them to trade down to another property in the area
• the property must be suitable for the needs of the household (e.g. it is not overcrowded)
• owners must have sought debt counselling and advice, agreed to debt rescheduling and discussed
• alternative options with mortgage lenders before admission to the scheme
• applicants must not have a second home (including abroad)
• caps will be set on the value of the property (at regional level) and on the household's income level

What actually happens to eligible applicants?

• On referral to the local authority, the household's homelessness eligibility is assessed
• If eligible, the lender is alerted
• Money Advisors are engaged
• Money Advisors draw up and agree with the household a debt management plan or other financial solution setting out their realistic affordable housing costs
• Registered Social Landlord or HomeBuy agency is engaged
• The property is visited to ensure it is structurally sound
• Decision is taken on the suitability of a shared equity option or mortgage to rent
• Deal is made with lender by Registered Social Landlord or Money Advisor

Isn't the scheme overly complex - won't it cost a fortune to deliver/push up council tax?
We do not anticipate any new burdens being placed on local authorities as a result of administering a mortgage rescue scheme.  There should, therefore, be no impact on non-participating households' council tax bills.

When will the households get their money?
Households don't receive money!  Negotiations take place between Registered Social Landlords and lenders once a debt management plan or other financial solution has been agreed, the property has been visited and a decision has been taken on the most appropriate form of rescue.  This process is expected to take around three months (including a 'cooling off' period for the household).

Aren't you just bailing out less responsible households?
No!  We are targeting support at vulnerable households at risk of repossession to help them sustain home ownership and/or remain in their homes.  Our mortgage rescue scheme is designed to support those who cannot pay, not those who won't pay their mortgages.  That is why households will need to meet strict eligibility criteria and agree to a debt management plan or other financial solution to qualify.

Does this include people in Freehold and Leasehold?
Yes - homeowners of freehold and leasehold properties are eligible for the scheme.

Why aren't you helping hard working families?  Isn't this yet another disincentive for work?
Many of the households eligible for support will be hardworking families who face difficulties in meeting mortgage payments as a result of current market conditions.  This is not a disincentive to work.  Separate benefits help out-of-work homeowners in meeting their mortgage payments.

Why aren't you making irresponsible lenders pay for this rather than the tax payer?
The Government has made a strong effort to support the market.  The scheme represents good value for money for the tax payer through the avoided costs of expensive Bed and Breakfast and temporary accommodation.  Lenders are looking at further options to assist households due to experience payment shock in the coming months, and we are working closely with the Council of Mortgage Lenders and partners to achieve this.

Are these people still eligible for other benefits?
The Mortgage Rescue Scheme does not affect a household's eligibility for other benefits.

Visit www.direct.gov.uk for further information about the scheme.

Back to top of page...