Will the government’s homeowner mortgage support scheme work?
Earlier this month the government announced further details relating to the homeowner mortgage support scheme that was first mentioned by the Prime Minister, Gordon Brown, at the beginning of December. The basic aim of the scheme appears to be quite simple – that homeowners will receive assistance and support with regards to mortgage interest payments for up to tow years through deferred payments in the event that they suffer a sudden loss of income through their employment or self employment.
However, many officials are concerned that only a small number of homeowners will actually ever qualify for the scheme because of the numerous conditions that have been put into place. On top of this, the scheme is only voluntary for lenders, and whilst the major banks have agreed to the scheme in principle there is no guarantee that they will actually exercise the scheme when the time comes, so many homeowners may find that their banks will not accept them for the scheme even if they meet the many requirements.
It is thought that only nine thousand or so homeowners may actually benefit from the scheme, and even this is based around whether the lenders decide to allow the borrowers to enter into the scheme given that it is a voluntary one.
The Treasury has stated that some of the details of the scheme are still being worked out with one Treasury official stating: “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.”
It is thought that up to 75,000 homeowners could end up having their properties repossessed next year based on predictions made by the Council of Mortgage Lenders, and it is hoped that this scheme will help to reduce the number of people that face losing their homes.
However, one finance industry official stated: “This scheme is virtually worthless and will benefit very, very few homeowners who may be struggling. 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”.
The criteria that is set out as part of the scheme includes the loss of income being significant but not permanent, the borrower being able to maintain set repayments on their mortgage each month, the borrower having already maintained repayments on the mortgage, the borrower having discuss the situation with the lender, and the borrower having sought independent financial advice to ensure that they qualify for the scheme, amongst others. The scheme will not be made available to buy to let property owners and those with second homes.
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How disappointing — yet another govenment smoke screen !
Dear Bernard,
Please tell me if the government can help me.
I have MS and my income is fixed. Does the Line of Credit that I have act as a mortgage? Therefore am I eliible for help with my line of credi=mortgage?
Thank you for your answer.
Colleen Maguire