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Could a government Mortgage Rescue Scheme help you?

Negative Equity: What are my options?
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The Mortgage Rescue Scheme

The current economic climate has taken its toll on many and families have found themselves some of the hardest hit. A lack of work, redundancies and increasing debt have resulted in many families facing the prospect of having their home repossessed. However, if your home is at risk then there may be help available in the form of ‘The Mortgage Rescue Scheme’.

For families with priority needs

This scheme is aimed at families who have ‘priority needs’ and their income is below £60,000. Priority needs would mean you have someone pregnant, disabled, elderly or young children living there.  You shouldn’t own a second or holiday home and the value of your mortgage and any loans secured against it, should be between 75% and less than 120% of your homes value.  Under normal circumstances where repossession  would take place, the local council would find suitable accommodation for the family, but the new scheme is designed to keep families in their own homes wherever possible.

If you qualify, the government would appoint a ‘Registered Social Landlord’ who would buy part or all of your home, for you to then rent some or all of it back, in order to decrease your outgoings. This would take place in one of two ways. Firstly, the Landlord can receive a government grant which pays off part of your mortgage and other secured loans, meaning you owe the Landlord a proportion of your home and make repayments to them who can be more lenient than other lenders. This is called Shared Equity. The other option is called Government Mortgage to Rent. This is when the Registered Landlord would buy your entire property from you at 90% of its market value and pays your debt to the lender off. You then you rent your home back from the Landlord at an affordable amount (usually 20% less than market rates). This is a more extreme solution and designed for people with negative equity or unstable incomes. It does mean you no longer own your home at all, but if you are unlikely to receive a mortgage in the future, then it is one option for continuing your stable home environment for your family.

Last resort help

The Mortgage Rescue Scheme is clearly a last resort for families facing repossession, so if at all possible, exhaust every other option first or even better, pre-plan for any unexpected events. You can take out mortgage insurance which can cover your mortgage payments should you be made redundant, become ill or have an accident which makes you unable to make your payments.

Mortgage payment protection Insurance

Don’t bury your head

If you are struggling to make a payment you should contact your lender as soon as possible. While you may want to bury your head in the sand, shove the bills under the doormat or hope that you will find the money from somewhere quickly, contacting your lender can actually help in the long run. They may be able to offer solutions to help such as payment breaks, extending the mortgage term, interest only payments or reduced payments for a period. As long as they are aware you are in difficulty and taking active steps to resolve the situation, they can stop the clock which would automatically start ticking towards repossession, should you not contact them at all.

Keep communicating with your lender

Banks shouldn’t start repossession while you are negotiating with them, so keep communication open and honest from the start and have some security that should you face repossession, the Mortgage Rescue Scheme may be your emergency parachute give you a safe landing while you get your feet back on the ground.

 

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About Rebecca Robinson

About Rebecca Robinson

After spending the last 8 years juggling life as a mum of two, wife and working full time as a Project Manager for a global telecommunications company, Rebecca Robinson made the decision to follow her love of writing and took the plunge; turning her passion into a full time career. Since becoming a full time writer, Rebecca has worked with various media and copy-writing companies and with the ability to make any topic relevant and interesting to the reader, now contributes to The Working Parent on articles ranging from credit cards to teenage relationships. Ever the optimist, Rebecca's dreams for the future include a house in the country filled with children, dogs and horses in the field!

Website: Rebecca Robinson

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