Mortgage rescue scheme
Mortgage arrears and managing debt
If you have difficulty meeting your mortgage payments get help from the housing options and advice service through h&f advice.
We can:
- contact your mortgage lender to try and negotiate a solution that is acceptable to all parties
- help you in court proceedings and provide representation at most county court hearings
- give you advice if have to leave your home
The majority of mortgage lenders are extremely reluctant to take possession proceedings against homeowners as this is costly and time consuming. Lenders often welcome suggestions to resolve the situation for the benefit of all concerned.
Contact your lenders as soon as you realize you may have problems meeting your mortgage payments. It is difficult to help if arrears have built up and you haven't made the effort to negotiate a solution with the mortgage lender.
Use the links below to jump to the relevant section of this page:
- What is it?
- Why mortgage rescue?
- How does it work?
- Who can it help?
- When is it available?
- Glossary of housing and home ownership terms
- Frequently asked questions
- Links to other LBHF services & links to other sites (opens a new web page)
» Comprehensive information about mortgage arrears
Mortgage rescue scheme - what is it?
The council is developing a package of measures designed to prevent some of the most vulnerable households from losing the homes they own. The mortgage rescue scheme is aimed at those who would be eligible for homelessness and housing assistance and is subject to a range of eligibility criteria. The scheme is intended to avoid repossessions in Hammersmith and Fulham.
Our mortgage rescue package has the following 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.
The international market turbulence is creating a challenging environment in the housing market, interest rates have risen and we are determined to take action to help those facing repossession. These measures build on our existing work of encouraging and maintaining home ownership through our raft of h&fHomeBuy products. We are to launch mortgage rescues for those most likely to need assistance were they to be repossessed.
Mortgage Rescue will operate by bringing together the council, Registered Social Landlords (RSLs), lenders and debt advice agencies. 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 Housing Corporation's value for money assessment criteria after a Money Adviser has advised on the most appropriate route after establishing a household's affordable housing costs.
This scheme will not help those who are in negative equity. It is subject to a set of eligibility 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.
The scheme aims to help eligible households over two years. We are working with the Council of Mortgage Lenders (CML) (opens new window), the Housing Corporation, the National Housing Federation, local authorities, Money Advice agencies and RSLs to develop the mortgage rescue proposal.
As part of the Pre-Budget Report on 25 November 2008 the scheme had been enhanced to cover vulnerable households at risk of repossession because of additional loans secured on their home. Often households are more likely to default on these loans because of higher interest rates.
Hammersmith and Fulham Council and the Communities and Local Government are working alongside experts from the lending sector, local authorities, the money advice sector and Registered Social Landlords to ensure that the Mortgage Rescue scheme is available as soon as possible.
As a trailblazing council developing an enhanced housing options service, we have been taking applications since Spring 2009.
» Visit our online housing jargon buster
» Mortgage rescue scheme information on Communities and Local Government website (opens new window)
» Homeowners mortgage support information on DirectGov website (opens new window)
» Download the Guide to Homeowners Mortgage Support booklet (pdf)
» Download the Homeowners Mortgage Support Q&A document (pdf)
» Download the NHAS leaflet on mortgage advice
Frequently asked questions - about the Mortgage Rescue Scheme
How do people apply?
Households
- in financial difficulty
- at risk of repossession and
- threatened with homelessness
should seek advice from their lender, their council, Citizens’ advice bureaux or other advice agencies.
Referrals to a local housing authority may be made by advice agencies, courts or lenders. Households can also self-refer.
Who can get help?
On referral to the local housing authority, an assessment of a household's eligibility will be made in the same way as for homelessness assistance. The household must include someone with priority need as defined in the Housing Act 1996, as amended in the Homelessness Act 2002
The following criteria will also apply:
- all owners of the property must agree to being considered for the mortgage rescue scheme
- equity owned in the property must be worth enough to cover priority debts
- living in the property must be sustainable after mortgage rescue
- the household must have a clear need to stay in the area
- it would not be practical for the household to trade down to another property in the area
- the property must be suitable for the needs of the household (e.g. it is not overcrowded nor under-occupied)
- owners must have sought debt counselling and advice, agreed to debt rescheduling and discussed alternative options with mortgage lenders before admission to the scheme
- applicants must not have a second home (including abroad)
- caps will be set on the value of the property (at regional level) and on the household's income level
What actually happens to eligible applicants?
The process is as follows:
On referral to the local authority, the household's homelessness eligibility is assessed. If eligible,
- the lender is alerted.
- Money Advisors (MAs) are engaged.
- Money Advisors draw up and agree with the household a debt management plan or other financial solution setting out their realistic affordable housing costs.
- Registered Social Landlord (RSL) or HomeBuy agency is engaged.
- The property is visited to ensure it is structurally sound.
- Decision is taken on the suitability of a shared equity option or mortgage to rent.
- Deal is made with lender by RSL or Money Advisor.
When would households get their money?
Households don't receive money; negotiations take place between RSLs and lenders once a debt management plan or other financial solution has been agreed, the property has been visited and a decision has been taken on the most appropriate form of rescue. This process is expected to take around three months (including a 'cooling off' period for the household).
Aren't you just bailing out less responsible households?
No. We are targeting support at vulnerable households at risk of repossession to help them sustain home ownership and/or remain in their homes. Our mortgage rescue scheme is designed to support those who cannot pay, not those who won't pay their mortgages. That is why households will need to meet strict eligibility criteria and agree to a debt management plan or other financial solution to qualify.
Does this include people in Freehold and Leasehold?
Yes - homeowners of freehold and leasehold properties are eligible for the scheme.
Why aren't you helping hard working households? Isn't this yet another disincentive for work?
Many of the households eligible for support will be hardworking families who face difficulties in meeting mortgage payments as a result of current market conditions. This is not a disincentive to work. Separate benefits - such as Support for Mortgage Interest (SMI) assist out of work homeowners in meeting their mortgage payments.
Are eligible residents eligible for other benefits?
The Mortgage Rescue scheme does not affect a household's eligibility for other benefits. There is no double counting, however entitlement to Support for Mortgage Interest (SMI) will be reduced to reflect the size of the new loan.
