New help for jobless homeowners

| January 5, 2009 | 0 Comments
New help for jobless homeowners

The Government is improving the help available for homeowners facing mortgage arrears, and ultimately repossession, because they have lost their jobs.

Changes to Support for Mortgage Interest (SMI) were outlined last year and due to take effect from April 2009 but the worsening of the credit crisis and rising unemployment have prompted ministers to bring forward the new measures.

From today, the means-tested benefit is available after 13 weeks, rather than 39 weeks.

Homeowners with mortgages of up to £200,000 may be eligible although SMI only provides mortgage relief to people already receiving a means tested benefit, such as income support, pension credit or income-based jobseekers allowance.

Repossessions are expected to rise to 75,000 during 2009, according to the Council of Mortgage Lenders.

However, the estimate could be optimistic because reports that the downturn in the UK economy will be worse than originally anticipated are consistently gloomy and Prime Minister Gordon Brown has admitted that the recession will probably last for two years.

Meanwhile, Work and Pensions Secretary, James Purnell, has announced that a new scheme is being developed to help households where one of two earners has lost their job.

Discussions are ongoing but lenders may be prepared to allow homeowners to defer their mortgage payments for up to two years.

It is understood that qualifying borrowers will need to be able to show that they have been making some level of regular repayment on their mortgage and that they have been in contact with their lender regarding their payment difficulties.

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