Struggling Mortgage Owners Can Defer Mortgage Payments For Two Years
The Government is launching a new scheme to help homeowners where their income has been hit by redundancies or loss of overtime payments.
There was a surprise addition to the Queen’s speech this year with Prime Minister Gordon Brown announcing those who have suffered a severe drop in earnings will be allowed to put their mortgage payments on hold for up to two years.
The new legislation will mean those who lose their jobs can get help if their mortgage is worth less than £400,000 and they have less than £16,000 in savings. The government will step in to help those who lose their jobs, effectively underwriting their mortgage payments.
The scheme is said to help those whose interest payments aren’t covered by the benefits scheme. These include two income households where one earner has lost their job, or where overtime income has disappeared.
The move was introduced in an attempt to avoid an increase in home repossessions which were predicted at reaching similar levels to those seen during 1991, the worst year of the previous recession.
Currently those who are on benefits can get help with their mortgage payments if the amount borrowed is under £200,000.
Exact details of the scheme terms have yet to be announced and at present the Council of Mortgage Lenders couldn’t provide any more information than publicly released.
The Treasury announced many of the top high street lenders including Nationwide, Lloyds TSB, HBOS, Northern Rock, RBS, HSBC, Barclays, Abbey and RBS - have agreed to support the new scheme. These mortgage providers cover 70% of the mortgage market. Building Societies have also expressed an interest in taking part.
Detailed information is expected to follow in the New Year to explain exactly how the scheme will operate. It is hoped the move will help thousands of families keep their homes giving them valuable breathing space and time to get back on their feet.
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