News: Government bailout for mortgagees: Mortgage Rescue Scheme

Thu, 23 Apr 09

Many households and homeowners are finding themselves in difficult times as a result of the global economic recession. In order to help the most hard hit of these households, HM Government has introduced the Mortgage Rescue Scheme for those facing repossession of their homes.

Of the more than 300 households having applied for the scheme to date, Orbit Housing Association is planning to help up to 150 over the next two years.

Specifically, the plan involves what is referred to as a 'registered social landlord' in the form of a housing association. This association would then buy either part of the home in question and provide a more affordable mortgage repayment scheme, or purchase the whole property and rent it to the former owner.

Orbit has recently completed the first successful applications in England since the scheme’s inception in January. All local authorities are reported to have signed up to the scheme, according to the Communities and Local Government (CLG).

The CLG has said that the scheme amounts to £200 million and is projected to prevent up to 6,000 repossessions by January 2011. While its lack of short-term or interim targets makes an assessment of effectiveness complicated, the CLG maintains that the scheme is demand-led and under constant review.

Specifically, two types of households are targeted by the MRS: those who have undergone a sudden and steep drop in income as a result of downsizing and loss of work, and those who do not have many financial prospects for the future.

The success of application for the scheme depends upon eligibility elements such as having dependent children and earning less than £60,000 per year.

See also: Home Remortgaging Guide

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