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Mortgage rescue schemes

The Mortgage Rescue Scheme was introduced by the Government to help homeowners and prevent vulnerable families lose their homes.

If you are a homeowner and are worried about repossession or keeping up with your mortgage repayments you should first read the help and advice available from the DirectGov website. You can also get more information from the Homeowners Mortgage Support.

What is it?

A package of measures designed to prevent some of the most vulnerable families losing their homes and experiencing the trauma of repossession. This scheme is aimed at those who would be eligible for homelessness assistance and is subject to a range of eligibility criteria.

The mortgage rescue package has two elements:

  • Shared equity - this is designed to help householders who have experienced payment shocks and need some help in paying their mortgage.
  • Government Mortgage to Rent - this is designed to help the most vulnerable households on low incomes with little chance of sustaining a mortgage.

How will it work?

Mortgage Rescue operates by bringing together our Housing Advice service, a Registered Social Landlord (RSL), lenders and the our Debt Advice Service. The two elements work in the following ways:

  • Shared equity - RSL provides an equity loan enabling the householders' mortgage repayments to be reduced.
  • Government Mortgage to Rent - RSL clears the secured debt completely and the applicant pays rent to the RSL at a level they can afford.

The level of grant to a RSL will be determined using the Homes and Communities Agency's value for money assessment criteria after a Debt Adviser has advised on the most appropriate route after establishing a household's affordable housing costs.

Who will it help?

This scheme is subject to a set of eligibility criteria and tests. Depending on individual circumstances, there are two possible options for those eligible:

  • Shared equity - those who have an equity share in their homes and are facing a payment shock from remortgaging and/or higher living costs but likely to retain current income.
  • Government Mortgage to Rent - those who are unable to meet lenders' requirements e.g. those on unstable incomes. Those who are more suited to social tenancies.

It was announced as part of the 2009 budget that the scheme was being expanded to help people in negative equity (where the total of their secured loans exceeds the value of their property) from 1st May 2009. Households that have debts that are up to 20% greater than the value of their home are now able to apply for the scheme (provided all other eligibility criteria are met).

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Last Updated on Monday, 08 November 2010 13:53

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