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Mortgage Rescue Plans

For years now the government has been under intense pressure to find a solution to the multiplying problem of homeowners in distress of losing their homes. Foreclosures in our country have been steadily on the rise as more jobs are lost due to the weakening economy. The local housing authorities have finally come up with a Mortgage Rescue plan that is meant to help needy families keep their homes. However, many controversies have arisen due to the possible detrimental effects of this new plan.

Are You Eligible?
           “Phew!” you say?
            Well not just anyone can be approved for this plan and the process is rather strenuous. Homeowners eligible for this plan are referred to as people of “priority need”. In other words, single healthy men can just forget it!
Eligible applicants could be:

  • A family with dependent children
  • A pregnant woman
  • Someone with physical or mental ailments
  • The Elderly

Other factors include:

  • The value of you home, which must be more than the amount of your loan
  • Your income, which must not exceed £60,000 per year
  • The value of your home must not exceed a certain value which is determined by region

and last but not least, my favorite……..

  • Applicants must not own a second home. Can you imagine someone asking for aid when they own more than one home?

2 Ways to Get Financial Help
There are two different systems implemented to help homeowners in distress.

  • Shared Equity Loan: This is an agreement come to between the homeowner and the mortgage lender to pay only the interest fees on their loan for up to two years.
  • Government Mortgage to Rent: The RSL will buy the home for 97% of the market value and homeowners may live in their home as tenants paying lower rent.

Why So Controversial?
So what is it about this plan that gets people so upset you ask? Well, many say that since the homes must not have negative equity, meaning the value of the home must be more than what the homeowner owes to the lender, restricts many from being eligible. House prices have dropped dramatically and what the homeowner may have bought the home for last year may not be what it is worth today.
            The Council of Mortgage Lending, CLS, says that this plan will ultimately increase the cost for homeowners in the long run. They estimate that if lenders put off repossessions many more new mortgages will be refused because of the negative effect on the capital of lending companies.

Take the Hand
If you are one of the many homeowners who are close to repossession of their homes reach out to your local council and find out if you can get help. This mortgage rescue plan was designed in September last year and has swept the nation in over 80 councils across England. Scotland, Wales, and Northern Ireland will also jump on the boat and implement their own mortgage rescue plan in the near future.
            “We are determined to do everything possible to ensure that repossession is always a last resort. For the most vulnerable households, the mortgage rescue scheme will be available to ensure they can stay in their homes.”-Margaret Beckett, Housing Minister

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