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By Russell Cavanagh
Staff Writer
Wednesday, 15 October 2008 |
Mortgage Relief Scheme for Vulnerable People
Special Notes:
- You can find contact details for your local authority by clicking onto the DirectGov website.
- The spokesperson mentioned in this article is from the Department for Communities and Local Government.
- Beware of private companies that offer to buy your home and rent it back to you. They often pay much less than market value and the tenancy they subsequently offer is usually very insecure and on a short-term basis.
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A MORTGAGE relief scheme backed by the Government is being developed to help keep the most vulnerable home-owners in their properties.
£200m will be available to vulnerable families experiencing the trauma of repossession due to mortgage arrears.
'Vulnerable families' will be those who would otherwise qualify for rehousing under homelessness legislation.
The scheme is being developed in order to assist up to 6,000 families over the next two years.
It is in recognition of difficulties caused by the credit crunch and a Government spokesman told ChooseMoney that "it should be in operation by the end of the year".
Who is eligible?
"Families facing possession proceedings at court due to falling behind with mortgage repayments and who would be eligible for assistance from their local authority's Homeless Section are being targeted for help," according to the spokesman.
He did however warn that "people who have acted recklessly or irresponsibly will not be assisted."
To be eligible for rehousing under homeless legislation and for the rescue scheme, you have to be threatened with homelessness within 28 days.
You also have to be in 'priority need' and this means families with children.
'Reckless' and 'irresponsible' behaviour would include making no effort to pay anything to mortgage or secured loan repayments.
This is in line with current criteria in assessing eligibility for rehousing through local authorities.
People with second secured loans or in negative equity will not receive help under the scheme.
How it works
There are three options in the rescue package:
- Shared equity - Helps with repayments to the lender through a loan borrowed against any equity in the property so mortgage payments can be reduced to affordable levels.
- Shared ownership - Is designed to help borrowers who can currently afford only partial repayments. A housing association, housing trust or the local authority agrees a shared ownership lease in order to buy a share in the family home and let the borrower pay off some of the mortgage.
- Sale and rent back - Helps the most vulnerable households on low incomes through sale of the house to a housing association, housing trust or the local authority. They then rent it back at a level they can afford.
The government spokesperson advised: "Households facing repossession from mortgage lenders present themselves to their local authority for rehousing."
"The local authority's 'Homeless Section' will assess them initially and make a referral to an independent money adviser [eg. Citizens Advice Bureau]," they added.
Contact your local authority to find out more.
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