Mortgage Rescue Scheme
What is the Mortgage Rescue scheme?
The Mortgage Rescue scheme is for people who are at risk of becoming homeless
because they’re unexpectedly unable to meet their mortgage repayments. It aims
to help up to 6000 households over two years. The scheme is now open to householder
who are in 'negative equity' (up to 120% of the market value of the property)
It’s very important if you are in financial difficulty and at risk of repossession
that you get advice from your bank or mortgage lender as soon as possible. You
may be able to make arrangements to renegotiate the terms of your repayments.
Your lender should treat you fairly and think about what they can do to help you
keep your home.
If you are still worried, talk to an advice agency, your local Citizen's Advice
Bureau, who can provide independent financial advice, or your local council.
How the Mortgage Rescue scheme works
If you are facing repossession, the Mortgage Rescue scheme could help you stay
in your home by making your mortgage repayments more affordable for you. Advice
agencies, courts or lenders can refer you for the scheme to your local housing
authority - the organisation that manages housing for your council. Or, contact
your local council to find out how to get in touch with your local housing authority.
If you are eligible, the council will arrange for you to meet with their money
advisers. They will agree with you a plan to manage your debt or some other way
that you can meet your housing costs.
Then, the council may involve my4walls, your HomeBuy Agent who will assess your
home. Depending on your circumstances, my4walls may help you either with a ‘shared
equity loan’ or through ‘Government mortgage to rent’.
Shared equity loan
My4walls can provide a shared equity loan, which means we will pay off a proportion
of your mortgage. In return they receive a share in your property’s ‘equity’ –
the market value of your home minus the outstanding mortgage balance. My4walls
will agree on the proportion, which could be between 25 and 75 per cent of the
total mortgage. It will be based on the assessment of your household’s finances.
This will reduce your mortgage to a more affordable level so you can continue
to make repayments.
Government mortgage to rent
We may suggest a Government mortgage to rent, which means we will pay off your
mortgage completely by buying the property. You’ll be able to stay in your home
and make repayments to us as our tenant at a level you can afford.
You’ll continue to receive advice after you have entered the scheme to help you
manage your finances.
Who can get help from the Mortgage Rescue scheme?
To be eligible for the scheme your household must include someone in 'priority
need'. This is someone whose need for accommodation is a particular priority because
of their circumstances. This could be:
- a pregnant woman
- someone with dependant children
- someone who is vulnerable because of old age or a physical or mental impairment
You’ll also need to meet the following criteria:
- all owners of your home must agree to be considered for the Mortgage Rescue
scheme
- you must have sought debt counselling and advice and agreed to arrangements
to repay your debts
- you should have discussed all other options to meet your repayments with your
bank or mortgage lender
- your household must earn less than £60,000 a year
- the value of your home shouldn’t be higher than certain levels set for each
region – the level set for Yorkshire is £140,000 (although properties which exceed
this cap will be considered on a case by case basis)
- you must have a clear need to stay in your home, which means it’s not practical
or reasonable to move somewhere smaller or cheaper
- your home must be suitable for your needs, for example, it's not overcrowded
- you shouldn’t own a second home, including a home abroad
- the value of the part of your home that you own must be enough to pay off any
outstanding debts, although 'negative equity' will be considered up to 120%
If you do not think you qualify for Mortgage Rescue Scheme there may be other
options for you. Speak to the Citizen's Advice Bureau or another money advise
agency.
Owners of freehold and leasehold properties are eligible for the Mortgage Rescue
scheme.
If you have any further questions please call our office on 0113 243 6893
