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Homeowner Mortgage Support Scheme – will you be eligible?

Thursday, 11 December 2008

Writes Hazel Cottrell
hazel.cottrell@consumerchoices.co.uk

The government has revealed details of its scheme to support homeowners in financial difficulty, but there are still many questions to be answered.

The government yesterday gave further details of the proposed Homeowner Mortgage Support Scheme, part of a raft of proposals it is introducing to avoid massive repossessions in the UK.

Full details have not yet been clarified and one crucial factor seems to be whether your status as unemployed is considered temporary or permanent, although how this will be judged it yet to be revealed.

The latest release states:

“The scheme will allow lenders to reduce a borrower’s current monthly mortgage payments, with the deferred payments rolled up, added to the principle, and paid at a later date when the borrower’s financial circumstances improve.”

“The government will guarantee the lender against a proportion of any loss incurred on the deferred interest payments in case the borrower defaults.”

The statement also lists a number of further eligibility criteria for the scheme. You can find a full list on the HM Treasury website (www.hm-treasury.gov.uk) but the most significant are as follows:

• Your mortgage is no more than £400,000.
• You have less than £16,000 in savings
• You have fallen into arrears for a number of months
• You have been in dialogue with your mortgage lender and are making some level of regular payment
• You have received financial advice from a third party to determine your eligibility for the scheme.

Chris Eagle, commercial manager at CreditChoices.co.uk said: “The details that have so far been released are incredibly vague and pose twice as many questions as they answer.

“It’s significant to note that while the Council of Mortgage Lenders (CML) has estimated that repossessions could top 75,000 next year, last week housing minister Margaret Beckett suggested that the new government scheme is only expected to help around 9,000 borrowers.

“Clearly this scheme, if it does come to fruition, will only be made available to a fraction of those facing repossession. If you are currently struggling with mortgage repayments, you can’t necessarily rely on this scheme to help, so it’s essential you seek independent advice.”

The following organisations can offer you free, independent advice:

• The Citizens Advice Bureau (www.citizensadvice.org.uk) offers confidential advice by phone and face-to-face. Visit the website to find your local CAB.
• The National Debtline (www.nationaldebtline.co.uk) provides information and resources for coping with debt on their website as well as a helpline on 0808 808 4000.
• The Consumer Credit Counselling Service (www.cccs.co.uk) offers advice, support and counselling for anyone who is worried about debt. You can call the helpline free on 0800 138 1111.

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