It seems things have gone a little quiet since Gordon Brown rather hastily announced help for people losing their jobs to pay their mortgage, but more details on the scheme were released last week.
Having spoken to people working in the mortgage industry, it seems that there was naturally quite a lot of interest in the scheme from people who are already having problems paying their mortgage, but there was little the lenders could do at this point because the details weren’t (and still aren’t) finalised.
And despite all of the time spent on this scheme, it seems thatit may only help around 9,000 people, due to the amount of criteria that you must meet in order to be elgible:
- You must have suffered a loss of income from employment or self-employment which now makes full mortgage payments difficult, but which is not expected to be a permanent.
- You must have been talking to your lender, and have been making some level of regular payment to them.
- Your mortgage must be £400,000 or less.
- You must have less than £16,000 in savings.
- You must be the owner and occupier of the property – this does not cover buy-to-let properties or holiday homes.
- You must not be receiving support for mortgage interest or mortgage rescue assistance.
- You must have been assessed as being able to pay a certain monthly amount on an ongoing basis.
- You must have received financial advice from someone other than your lender to determine if you qualify for the scheme, including testing the long-term sustainability of your financial position, plus your ability to resume your repayments once your income increases.
- You must have fallen into arrears for a number of months during which the lender has exercised forbearance.
As you can see, it’s a long list of criteria to meet, and there are apparently yet more practical issues for the Government to overcome before the scheme is launched, sometime next year.
To make matters worse, what makes the scheme even less effective is that lenders will be joining in “voluntarily”, although many have agreed to it “in principle”.
Having said all of that, if it does get off the ground, then for those few people that qualify it will hopefully mean they do not have to worry about their house beng repossessed, at least for a certain period. They will be able to stop repaying interest on their mortgage for two years. However, the unpaid interest will be added to the balance of the mortgage and will eventually have to be repaid.
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