Mortgage Rescue Scheme under threat

| July 20, 2010 | 0 Comments

The Government is to reduce funding for the Mortgage Rescue Scheme, the BBC has reported.

The scheme was set up in 2009 to help vulnerable homeowners in England facing repossession, by offering the following options.

Government Mortgage to Rent is available to households on low incomes, with little chance of sustaining a mortgage, and involves a social landlord purchasing the property with the applicant staying on as a tenant.

Option two, or “shared equity”, is designed to help householders who have had “payment shocks” and allows for a social landlord to provide an equity loan that can enable mortgage repayments to be reduced.

It would appear that the future of the scheme is now in doubt, with Housing Minister, Grant Shapps, wanting to see it refocused to offer better value for money.

Homeowners struggling with mortgage arrears will also be hit by a change to the Support for Mortgage Interest (SMI) scheme in the autumn.

The scheme allows borrower in financial difficulties to defer mortgage interest until their circumstances have improved and the SMI rate was frozen at a generous 6.08% in late 2008.

However, in the June Budget, Chancellor of the Exchequer George Osborne announced that from October, the rate would be paid at the level of the Bank of England’s published Average Mortgage Rate, to “better reflect” mortgage costs.

Tags: , , shared equity

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