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News: Mortgage Rescue Details Announced

Thu, 11 Dec 08

Further details of the government’s mortgage rescue scheme, aimed at helping those struggling to meet their repayments, have been announced.

Called the Homeowner Mortgage Support Scheme it will allow struggling homeowners to defer mortgage interest payments for up to two years.

Among latest details announced by the Treasury is the eligibility criteria for the scheme. To qualify borrowers will have to have suffered a loss of income from employment or self-employment that makes making full mortgage repayments difficult.

They must also have already had discussions with lenders about their financial problems, have a mortgage of less than £400,000 and have savings below £16,000. Borrowers must also ensure that they can continue paying a regular amount during the mortgage interest holiday. They must also be assessed as being eligible by a third party, not the lender.

If during the two years the borrower fails to pay the lender even the far smaller, monthly repayments then this could result in repossession proceedings.

Furthermore if the customer defaults, the Government will pay the lender the equivalent sum of the total amount of the interest guaranteed that is not recoverable from equity in the property.

The Treasury statement adds: “The new scheme will provide a bridge, giving homeowners who are experiencing financial problems sufficient time to find new employment or recover income, without the added concern and stress of potentially losing their home in the interim.”

According to estimates by housing minister Margaret Beckett around 9,000 households are set to benefit from the scheme, which is voluntary for lenders.

However moneysupermarket.com spokesperson Louise Cuming, told the BBC that it could be even less.

"The list of criteria that must be fulfilled before borrowers are even considered means that few will qualify and even fewer will actually be granted assistance due to the fact it is voluntary on behalf of the lenders, who have only signed up "in principle," she said.

 

 

 

By Joe Lepper

See also  - Mortgages

 

 

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