What is the Mortgage Rescue scheme?
The Mortgage Rescue scheme is for people who are at risk of becoming homeless because they're unexpectedly unable to meet their mortgage repayments.
It's very important if you are in financial difficulty and at risk of repossession that you get advice from your bank or mortgage lender as soon as possible. You may be able to make arrangements to renegotiate the terms of your repayments. Your lender should treat you fairly and try to help you keep your home.
If you are still worried, talk to an advice agency, your local Citizens Advice Bureau, who can provide independent financial advice, or your local council.
How the Mortgage Rescue scheme works
If you are facing repossession, the Mortgage Rescue scheme could help you stay in your home. Advice agencies, courts or lenders can refer you for the scheme to your local housing authority. Alternatively you can contact your local housing authority yourself. They will help you to complete a financial plan to manage your debt.
To be eligible you must be classed as priority homeless by your local housing authority. This will normally include:
- a pregnant woman
- someone with dependent children
- someone who is vulnerable because of old age or a physical or mental health impairment.
If you are eligible, the council will arrange for you to meet with their money advisers (if you have not already done so yourself). They will help you to complete a financial plan to manage your debt.
If it is decided that you are not able to manage your financial commitments in any other way, the local housing authority will refer you to Isos for help through the Mortgage Rescue scheme. Depending on your circumstances, Isos may be able to help you either by arranging for a Housing Association to buy your home and renting it back to you on an assured shorthold tenancy at an intermediate rent (normally 80% of the estimated market rent for the property), or by buying a share in the property so that you continue to pay towards a smaller mortgage to your lender, and also pay a subsidised rent on the share bought by the Housing Association.
You'll also need to meet the following criteria:
- all owners of your home must agree to be considered for the Mortgage Rescue scheme
- you must have sought debt counselling and advice and agreed to arrangements to repay your debts
- you should have discussed all other options to meet your repayments with your bank or mortgage lender
- your household must earn less than £60,000 a year
- the value of your home shouldn't normally be higher than £125,000 (although properties which exceed this cap may be considered on a case by case basis)
- you must have a clear need to stay in your home, which means it's not practical or reasonable to move somewhere smaller or cheaper
- your home must be suitable for your needs, for example, it's not overcrowded
- you shouldn't own a second home, including a home abroad
- the value of the part of your home that you own must be enough to pay off any outstanding debts, although 'negative equity' will be considered (normally up to 120%).
If you do not think you qualify for the Mortgage Rescue scheme there may be other options for you. Speak to your local housing authority, the Citizens Advice Bureau, or another money advice agency.
Owners of freehold and leasehold properties are eligible for the Mortgage Rescue scheme.
If you have any further questions please call our office on 0191 292 2749.