Summary: This article explains what the Mortgage Rescue Scheme is, who may benefit, and how to apply.
Anyone who is struggling to repay their mortgage in the first instant should always contact their lender to try to come to a suitable arrangement in order to make repayments more manageable. Failing that, a debt solution such as an Individual Voluntary Arrangement (IVA) or Debt Management Plan (DMP) may be appropriate. When all else fails, some individuals may be eligible for the Mortgage Rescue Scheme.
What is the Mortgage Rescue Scheme?
It is a government funded schemed aimed at those in severe financial difficulties who possibly face losing their homes and becoming homeless. If an application is successfully made, the council is likely to arrange an assessment of the property and they could suggest one of 2 options:
• Equity Loan. This is usually only offered where the equity in the property is less than 40%. It is provided by a Registered Social Landlord and the loan can be used to repay all, or part of the mortgage to reduce the monthly payments.
• Government Mortgage to Rent. It may be that the Registered Social Landlord will offer to buy the property at 90% of its value. The individual will then effectively rent the property from the landlord, but at a significantly reduced market rate.
Who can apply for the Mortgage Rescue Scheme?
There are a number of requirements in order to be considered for the Mortgage Rescue Scheme. Generally, it is only available to households where someone lives who is considered to be in priority need. This could include:
• Pregnant women.
• Those with dependent children.
• Those who could be considered vulnerable, eg those with a disability or the elderly.
Further criteria are as follows:
• Household income cannot usually be more than £60,000 per year.
• Only one property is owned.
• The value of the mortgage and additional debt cannot be more than 120% of the value of the property.
• The value of the property is within the limit set by the local council (is can vary between locations).
How can I apply for the Mortgage Rescue Scheme?
Individuals should contact their local council's housing association in order to apply for the Mortgage Rescue Scheme. They may also be referred by the Citizens Advise Bureau (CAB) or the mortgage lender themselves.