If you can’t afford to make the monthly repayments, the UK Mortgage Rescue Scheme offers a solution for hard-up homeowners who qualify under the new rules.
The UK government Mortgage Rescue Scheme (MRS) aims to help some of the most vulnerable homeowners to avoid repossession. You may be eligible for assistance if you're a pregnant woman, have dependent children, are a senior citizen or have a mental or physical disablement.MRS isn't designed to help everyone who is struggling with mortgage arrears, but the coalition government estimate that over 2,500 hard-up families will be assisted between now and when the scheme ends in spring 2013.
Your household income must be below £60,000 per annum.You don't own a second property, including a holiday home.Loans secured against your property should be less than 120% of your home's value. After consulting a Housing Association, this criterion isn't an obstacle to acceptance.The value of your property mustn't exceed the threshold set for your area. You should speak to your local council to find out the upper-limit for your town or city.
Shared equity loan – To qualify for the loan, you'll need at least 25% equity in your property. You'll then make a low monthly repayment on an interest-only basis. The money should be used to reduce your mortgage or secured loan repayments.Mortgage to rent – A Registered Social Landlord (RSL) is currently able to buy your property for 97% of the fair market value. You'll then become a tenant of a housing association at a rate that's 20% below the average for your local area. You'll be a tenant for at least 3 years.
The government has committed £200 million to MRS over the next two years, but there's been a very important modification. The redemption price is set to fall from 97% to 90%. This means that a property valued at £120,000 will now be purchased by an RSL for £108,000 rather than £116,400.The rules specify that the cumulative value of your loans can be as much as 120% of the value of your home. However, the lender is less likely to be agreeable if they aren't going to receive anything. If you have little or no equity in your home, the lender might not allow MRS to go ahead.
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If you are ineligible for MRS, there are other ways that enable you to prevent repossession. A lot depends upon your disposable income and how much equity you have in your property. For example, you may be able to arrange a sell and rent back to a property cash buyer for 70% to 80% of fair market value. You can get more for your home on the open market, but it's better than the alternative.If you've fallen upon hard times, talk to the lender to see if they're prepared to help you. Your lender may be prepared to offer you a repayment holiday or capitalise the arrears (add them to the principal). If you haven't already sought help, seek money advice from the Citizens Advice Bureau (CAB).
"Government Mortgage Rescue Scheme" Direct.gov