The Government last week launched a new scheme to help homeowners at risk of losing their home through repossession.
The new Homeowner Mortgage Support Scheme will work in conjunction with eight major mortgage lenders and allow those who are eligible to defer mortgage interest payments for up to two years.
Commenting in the Sunday Express, Richard Morea, L&C’s Mortgage Specialist said, “The full details are yet to be published.., but I imagine it will be subject to some pretty rigorous means testing to Qualify. And the money does have to be paid back. Mortgage repayments should still remain a top priority for families.”
What is the aim of the scheme? To help control the number of repossessions and to ensure that households have the option to stay in their homes if they suffer a loss of income. Which lenders are involved? The eight largest lenders - HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays, RBS and HSBC - who together cover 70% of mortgage market
How does it work? Homeowners who face a temporary drop in their income as a result of the downturn will be able to take a two-year 'holiday' from paying some - or all - of the interest part of their mortgage.
Up to 100% of the interest part of repayments can be deferred for up to two years – based on circumstances and agreed with the lender.
The deferred interest will be rolled up and added to the mortgage – this will have to be repaid when the holder’s circumstances improved. The Government has said it will guarantee the deferred interests payments.
Who is eligible? Details so far suggest that the scheme will cover mortgages up to £400,000. Anyone made redundant or facing a 'significant loss of income' can ask for help. This could mean a couple where one becomes jobless, someone whose overtime is cut and is unable to meet bills, or where a person is made redundant and has to take a lower-paid job.
Evidence of financial difficulty will have to be provided. Useful link: