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It is important to seek advice at an early stage if you cannot pay your mortgage as you may be able to keep your home. You need to:
- address the problem – don't ignore it
- talk to your lender
- show that you are willing to pay what you can
- find out what your options are
If you are worried that you may have to leave your home please contact the Housing Options team on 01784 446383, evening appointments are available. Please be aware that if you have paid other debts instead of your mortgage or spent your money on non-essential items, we may only have a duty to give you advice about finding alternative accommodation in the private sector.
Help with paying your mortgage interest
You may be able to get help towards paying the interest on your mortgage after 13 weeks of being on any of the following benefits:
- Income Support
- Jobseekers Allowance (income based)
- Employment and Support Allowance (ESA) – income related (previously known incapacity benefit)
Payments can be made towards your mortgage interest, loans to buy the property or home improvement loans, however, no help can be given towards capital owed on a loan, insurance premiums or mortgage arrears.
Mortgage support for homeowners
The Homeowner Mortgage Support scheme (HMS) can help you if your income has dropped as a result of these difficult economic times. HMS allows you to switch to an interest only mortgage and defer upto 70% of your monthly interest payments for upto two years. None of the mortgage will be paid, you will still need to pay it at a later date, meaning the mortgage term could be extended thus increasing the amount of interest repaid over the life of the mortgage.
You will not be eligible for the HMS if you are claiming mortgage interest benefits. Call our Housing Options Team to find out if your lender is involved in this scheme.
Who is eligible?
The homeowner must:
- have a mortgage with a participating lender
- be able to demonstrate their drop in income
- have made regular payments for five months
- have explored all other options with their lender
- commit to paying as much of the interest due as possible (this must be at least 30%)
- have savings of less than £16,000
- have taken out a mortgage or re-mortgaged before 1 December 2008 and only own one property
- have less than £400,000 left to pay on your mortgage or any other loans secured against your home.
Even if you meet these requirements, lenders have the final say as to who is accepted onto the scheme. Please note that the deferral of interest is likely to be recorded on your credit files and could have a substantial effect on your credit rating.
Mortgage Rescue Scheme
The Mortgage Rescue Scheme can help vulnerable homeowners stay in their home. You are eligible if you are:
- a person who has dependent children living with you or who are reasonably expected to live with you
- a pregnant women or person whom you might reasonably be expected to live with
- a person who is vulnerable because of old age, disability, mental illness or other special reason
How can I be referred to the scheme?
You need to:
- have explored all alternative options other than repossession
- have support for your application to the scheme by your lender
- have provided an up-to-date financial statement obtained from a professional money advice agency which shows that the scheme is a viable option
- be the homeowner and want to stay in your home, it must be your only home and it must not be in a poor state of repair
- have no outstanding charges other than those proposed to be cleared by the Mortgage Rescue Scheme or owner disputes
- be in negative equity, the loan value must not be greater than 120% of the loan
- have a household gross income of less than £60,000 per annum
- have a property not worth more than £235,000
Depending on your specific circumstances you will be offered one of two products following an assessment of your case:
Shared equity option - A Registered Social Landlord provides an equity loan allowing your mortgage repayments to be reduced. The key features of the shared equity option are:
- a homeowner has a minimum of 25% equity and a maximum of 40% equity
- a Registered Social Landlord provider gives a loan of between 25-75% of your current mortgage direct to your lender
- this loan is secured against your property as an equity loan
- your outstanding mortgage is reduced in line with the equity loan
- monthly payments are made by you on the remaining mortgage and the loan
- an interest fee of 1.75% pa (increasing by RPI plus 0.5% pa) is charged on the equity loan, payable in monthly instalments by you
- an equity contribution of 3% of the value of the loan is paid by you
- once rescued, repairs and maintenance continue to be your responsibility
- you can pay off the loan, in full or in stages, at any time. The amount payable increases if the value of your home increases.
Mortgage to rent allows you to remain in your property as a tenant for up to three years paying a sub-market rent.
Key features are:
- you have an existing mortgage of between 75% and 120% of the value of the property
- a Registered Social Landlord (RSL) provider buys your home and rents it back to you
- your property is bought for 97% of the current market value
- an equity contribution of 3% of the value of the loan is paid by you
- if you have less than 3% equity or are in negative equity, the 3% contribution is met by lender (this requires lender agreement)
- the RSL provider owns 100% of the freehold or leasehold
- the RSL grants a three-year tenancy
- rent is set at market rent less 20% and you may be eligible for Housing Benefit
- repairs and maintenance are the responsibility of the RSL
Help and advice
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