How to apply for the Government Mortgage Rescue Scheme – Mortgage Advice

The effect of the global economic downturn is having serious consequences for homeowners through out the UK. Homeowners with families are worried about not being able to pay their mortgage commitments as their jobs are affected by the recession. Expert advice and help is being sought by people from all walks of life that are facing money problems. They are searching for information about claiming Mortgage Rescue Scheme. Hopefully this article will provide you with an understanding of how the scheme works, the criteria needed to be considered and how to apply.  The scheme being discussed here is a government initiative and should not be miss understood with private investors that are looking to Buy and Rent back your property as private landlords.

How to apply for the Government Mortgage Rescue Scheme

Mortgage Rescue Scheme is a £200 million package that the Government has introduced to help vulnerable families from losing their homes and experiencing repossession.  The government may buy part or all of your home and rent it back to you. If you are in danger of losing your home and have a family then you may qualify under priority needs. Priority needs is where you may have an elderly relative living with you, a disabled member of the family, a partner that is pregnant or young children living in the home. This scheme is aimed predominately at families looking for a debt solution to save their homes from repossession and is only available to homeowners with an annual income under £60,000.

This scheme is aimed at helping around 6,000 vulnerable homeowners over the next two years. This scheme applies to homeowners in England. There are other schemes available and being developed in Wales, Scotland and Northern Ireland. This scheme is not a debt free scheme but it offers a debt solution to help save homeowner from repossession.

The rescue package has two parts:

Shared equity - has been designed to assist homeowners who are cannot afford their full mortgage. A landlord is found to purchase some of the mortgage and then the new landlord charges you a rent for the part of your home that they own. This should help reduce your monthly costs and make them more affordable without you losing your home.

Government Mortgage to Rent - Is for homeowners on low incomes with little chance of maintaining their mortgage. A government approved landlord is found to pay off your entire mortgage debt with your lender and then you rent the property back from your new landlord. The obvious landlords used in these instances are the Housing Associations that took over the responsibility for council houses and other shared ownership housing.

How do you apply for Mortgage Rescue Scheme

The Government Mortgage Rescue Scheme is aimed at helping around 6,000 homeowners

If you are concerned about being unable to meet your full monthly mortgage each month due to a redundancy or a drop in income then you need to talk to your mortgage lender first.  You should also talk to Citizens Advice Bureau or your local council if you are facing financial difficulty and you are at serious risk of repossession of being threatened with homelessness. Referrals for Mortgage Rescue Scheme can be made to the local authorities by the courts, your mortgage lender or Citizens Advice Bureau.

To be eligible for consideration for the Mortgage Rescue Scheme you need to firstly meet one or more of the Priority Needs Order 2001 which are as follows:

• a pregnant woman or a person with whom she resides or might reasonably be expected to reside
• a person with whom dependant children reside or might reasonably be expected to reside
• a person who is vulnerable as a result of old age, mental illness or a handicap or physical disability or other special reason, or with whom such a person resides or might reasonably be expected to reside.

This scheme is subject to an eligibility tests which depends on the applicants individual circumstances and the applicants need to meet the following criteria to be considered:

• All the owners of the property need to agree to being considered for Mortgage Rescue Scheme.
• Living in the property must be sustainable after the mortgage rescue scheme is in place.
• The homeowners must show a need to stay in the area for schooling or employment and they must show it is not practical to trade down to another home in area.
• The home must be suitable for the homeowners needs for example it is not overcrowded.
• The homeowners should have sought debt counselling and advice and have agreed to any debt rescheduling in order to get out of debt and they need to show that they have discussed alternative options with  their mortgage lenders prior to being accepted to the scheme
• The applicants must own no other property here or abroad
• There are maximum limits on the householder’s income level and the value of their property.

Communities and Local Government has worked alongside experts from the lending sector, local authorities, money advice sector and Registered Social Landlords to ensure that the Mortgage Rescue scheme was available as quickly as possible. Margaret Beckett the Housing Minister announced on 16 January 2009 that this scheme is now available in all participating local authorities. If you believe you are eligible you should contact the housing team at your local authority (council).

Your thoughts, experiences and comments are always welcome. You can join the discussion below by leaving your comments.