If you can’t meet your mortgage repayments, or you’re worried you might fall behind, contact your lender as soon as possible. You can also get free independent advice from other organisations and you may be able to get help with your mortgage from new schemes which started earlier this year as part of a series of government backed initiatives designed to help you.
Contact your Lender and agree a plan
Mortgage lenders are keen to help their customers sort out any payment difficulties. They may be able to come to a payment arrangement with you.
Depending on your payment history and whether your difficulties are likely to be long or short term, your lender might agree to:
Reduce your payments for a set period Charge you interest only for a while, if you’ve got a repayment mortgage (usually you pay capital and interest) Give you a ‘payment holiday’ Extend your mortgage term to reduce your payments
If you’re already in arrears
If you’ve already fallen behind, your lender will suggest a way to pay off the arrears gradually, alongside your usual payments. If you can’t meet the extra payments, you may be able to delay them for a while or add them to your loan. Again, it depends on your track record.
Always pay what you can
Pay as much as you can manage every month. Keeping up regular payments (even if they vary) shows that you’re committed. Your lender’s more likely to treat you sympathetically and you’ll minimise the arrears charges too.
You can find more mortgage payment advice from the National Homelessness Advice Service.
Mortgage Rescue scheme
The Mortgage Rescue scheme may help if you are having serious difficulties making your mortgage repayments and are in danger of becoming homeless if repossessed. Find out if you are eligible for help to stay in your home and how the scheme works.
What is the Mortgage Rescue Scheme
The Mortgage Rescue scheme is a government scheme, which is run by your local housing authority – the organisation that manages housing for your council. If you are eligible, you could get financial help to stay in your home. You make your application for help from the scheme to your local council.
The Mortgage Rescue scheme is only available in England. Separate schemes are either in place, or being developed, in Scotland, Wales and Northern Ireland. Search your local council?s website for more information about these schemes.
Who Can Get Help From The scheme?
To be eligible for the scheme your household must include someone in ‘priority need’. This could be:
· a pregnant woman
· someone with dependent children
· someone who is vulnerable because of old age or a physical or mental impairment
You?ll also need to meet the following criteria:
· your household must earn less than £60,000 a year
· the value of your home shouldn?t be higher than certain levels set for each region ? ask your council about the level for your area
· everyone named on the mortgage must agree to be considered for the Mortgage Rescue scheme ? although you don?t have to sign a written agreement
· you must have received debt counselling and advice from a free independent debt adviser at an organisation like the Citizens Advice Bureau or Shelter
· you should have made arrangements to repay any debts
· you should have discussed all other options to meet your repayments with your bank or mortgage lender
· you must have a clear need to stay in your home, which means it?s not practical or reasonable to move somewhere smaller or cheaper
· your home must be suitable for your needs – for example, there?s not too many people sharing the same space making it unsafe and unhealthy
· you must not own a second home, including a home abroad
Owners of freehold and leasehold properties who meet these criteria are also eligible for the Mortgage Rescue scheme.
You may be eligible for help from the Mortgage Rescue scheme if you are in ?negative equity?. This is when the amount owed on your mortgage is more than the value of your home. If you are in negative equity, you can apply for the scheme if:
· you meet all the other eligibility criteria
· the value of your mortgage (and any loans taken out against your home) is less than 120 per cent of the value of your home
You can be referred to the scheme by:
· advice agencies, like the Citizens Advice Bureau or Shelter
· your mortgage lender
· the courts
You can also contact your local council directly to get advice about the Mortgage Rescue scheme. Find Your local Council
When you apply for help from the scheme:
1. the council will arrange for you to meet with their money advisers
2. you?ll get advice and a plan to help you manage your debt or some other way that you can meet your housing costs
3. the council may arrange an assessment of your home
4. you may get financial help, either with a ?shared equity loan? or through a ?Government mortgage to rent?, depending on your circumstances
Shared equity loan
The council may involve a Registered Social Landlord (RSL) – an independent housing organisation registered with the Tenant Services Authority. The RSL can provide a shared equity loan, which means they will pay off a proportion of your mortgage. In return they receive a share in your property?s ?equity? ? the market value of your home minus the outstanding mortgage balance. The RSL will agree on the proportion, which will be based on an assessment of your household?s finances. This will reduce your mortgage to a more affordable level so you can continue to make repayments.
Government mortgage to rent
Alternatively, the RSL may suggest a Government mortgage to rent, which means the RSL will pay off your mortgage completely by buying the property. You?ll stay in your home and pay rent to the RSL as their tenant. The rent will be at a level lower than the ?market rate? – this will be cheaper than if you were renting from a private landlord.
You?ll continue to receive advice after you have entered the scheme to help you manage your finances.
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