Homeowners who fall behind in their mortgage repayments because of a temporary financial crisis could be protected from repossession for two years, under plans announced by the Government.
Income loss
A new Homeowner Mortgage Support Scheme will enable households that lose a large amount of income temporarily to defer some of the interest payments on their mortgages for up to two years. The deferred interest payments will be guaranteed by the Government, where banks participate.
Banks and building societies indicated they had little advance knowledge of the scheme, which is to be worked up in detail for it to become available to mortgage borrowers early in the New Year. The eight largest banks have agreed to be involved, said the Treasury.
Housing Minister Margaret Beckett says: "We are determined to do everything possible to ensure that hard working households have the option to stay in their homes if they suffer a loss of income during the downturn. This scheme will give households the breathing space to get back on their feet again and help ensure they do not face or fear repossession. It shares the risk of home ownership at this difficult time across all the partners - the Government, the lenders and the borrowers. We want to see all lenders signing up to this scheme as part of their efforts to ensure that repossession is always an absolute last resort."
'Explore all options'
The measures were welcomed by debt advisors. Citizens Advice Director of Public Policy, Teresa Perchard says: "The announcement today provides more reassurance to people, in particular working homeowners, that they need not face repossession of their home and reassurance to lenders that they can act fairly and make repossession a last resort.
"However to ensure that borrowers are not saddled with unreasonable and excessive payments after the two years are up it will be vital that both parties explore all the options available during this period. More also needs to be done to help those on the margins of the mortgage market whose lenders have not signed up to this scheme.
"Anyone who is has experienced a reduction in income should talk to their lender straight away. All lenders should provide an understanding and constructive response and help their customers arrive at a solution, taking into account the customers circumstances and ability to repay their debts. If your lender is not understanding then get free, confidential, impartial advice without delay. Getting advice, even at a late stage can help many people secure a workable agreement with the mortgage lender which prevents them from losing their home."