Introduction
Our Housing Options service provides advice and assistance for
people experiencing difficulties in regards to housing. This
leaflet explains the options and assistance available to homeowners
who are experiencing mortgage difficulties.
The Mortgage Rescue Scheme
The Mortgage Rescue Scheme is available to assist vulnerable
households who are at risk of losing their home due to
repossession. The scheme is being provided by the government to
assist those:
- Who are struggling to keep up their mortgage payments
- Who have had all the help that their lender can offer
- Who are worried about having their home repossessed
There are two types of ‘rescue’ under the Mortgage Rescue
Scheme, both of which are designed for households in differing
circumstances.
Rescue Options One - Shared Equity Scheme
The Shared Equity Scheme enables the homeowner’s monthly
repayments to be reduced. Under the scheme, a housing association
will provide you with a loan between 25 and 75 per cent of your
current mortgage. This will be paid directly to your lender to
reduce the amount that you owe. You will continue to make
repayments on your remaining mortgage and your loan. However, as
you pay a reduced rate of interest on the equity loan, the total of
these should be less than your present monthly mortgage repayment.
The Shared Equity Scheme is best suited to you if:
- You have between 25 per cent and 75 per cent equity in your
home, and;
- You wish to continue in home ownership
Rescue Option Two - Government Mortgage to Rent
The Government Mortgage to Rent scheme enables the homeowner to
sell their property to a housing association, whilst remaining as a
tenant. As a tenant under the scheme, you pay a reduced monthly
rent that is roughly equivalent to 80 per cent of what would be
charged by a private landlord. The Government Mortgage to Rent
scheme is best suited to you if:
- You are currently (or expecting) to become benefit dependent
and therefore you are unable to continue paying your mortgage
- You have little or no equity in your property
- You owe more money on your property than it is presently worth
(known as being in ‘negative equity’)
What steps should I take first?
All applications for assistance under the Mortgage Rescue Scheme
must be made through Peterborough City Council, which will assess
your suitability for the scheme and assist you with the
application. However, the Mortgage Rescue Scheme is designed as a
last resort, and you will not be considered for the scheme unless
you have explored all other options first.
If you are experiencing mortgage difficulties, then the very
first step to take is to speak to your lender, who may be able
to:
- Reduce your monthly mortgage repayments for a period
- Reduce the fees your lender charges you for missing or making
payments late
- Extend the length of your mortgage to reduce the monthly
repayments
- Add your arrears to the amount borrowed
- Support an application to the Homeowners Mortgage Support
scheme
- Offer you an interest-only mortgage
- Offer you a better loan rate
- Allow you time to sell your home, if this is what you want to
do
Whatever you do, do not ignore letters from your lender. Your
lender has a legal responsibility to look into all other options
before repossessing your home. You should always work with your
lender to explore possible ways to resolve your situation.
Other assistance available to homeowners
The Support with Mortgage Interest Scheme –
This scheme offers financial assistance with interest repayments
for those in receipt of state benefits, such as Job Seekers’
Allowance and Income Support. Information on the scheme can be
obtained from the Job Centre Plus website at www.jobcentreplus.gov.uk or
via the Pension Service.
Homeowner Mortgage Support Scheme – This scheme
provides support for homeowners who are facing difficulty in
meeting their mortgage repayments as the result of a short-term and
temporary reduction in their income. Under the scheme, the
homeowner is able to postpone part of their interest repayments for
up to two years. To apply you must first speak to your lender to
see whether they would support an application to the scheme.
Further information on the scheme can be found at www.direct.gov.uk/hms
The following options may also help reduce the burden if you are
experiencing mortgage difficulty:
- Renting out a spare room in your property
- Downsizing to a more affordable property
- Accessing debt advice - For free and impartial advice on how to
tackle debt, you can contact the National Debt Line on 0808
8084000.
If I have explored these options, who should I contact
next?
If you have explored these first steps, but still face mortgage
difficulties, then the next step is to contact the Peterborough
Housing Options team as soon as possible. A member of the team will
arrange to meet with you to discuss your situation, talk you
through your options, and assess both your suitability and
eligibility for the Mortgage Rescue Scheme.
To book an appointment with an advisor, you can contact the team
via 01733 864064, or via email at housingoptions@peterborough.gov.uk
If you require interpretation services, then please phone 01733
864064