Mortgage Rescue

If you are having problems paying your mortgage and are in arrears, help and assistance is available. Act now to stop the situation becoming worse.

1. I can't afford my mortgage payments

Talk to your lender

Major lenders have agreed to wait at least three months before taking repossession action and the new Civil Justice Council protocol (see useful contacts) says repossession should be a last resort. The law also says lenders must treat you fairly and take your circumstances into account.

Don't ignore any payment problems - mortgages are 'priority debts', which means you should pay them first as otherwise your home could be repossessed. Pay what you can and contact your lender as soon as you start having payment problems. Your lender may:

• make a repayment agreement with you
• reduce your payments for a set period
• cut the charges they make to you for being in debt with your mortgage
• charge you interest only for an interim period, if you have got a repayment mortgage (usually you pay capital and interest)
• give you a 'payment holiday'
• extend your mortgage term to reduce your payments
• offer you a better loan rate
• allow you time to sell your home - if that's what you want

The Homeowners Mortgage Support Scheme helps people stay in their homes after suffering a temporary loss of income - like having your hours cut, not being able to work overtime, or if you have to rely on one income after you or your partner lose your job. The scheme allows you to defer a proportion of your interest payments on your mortgage for up to two years.

If you are interested in getting help through the Homeowners Mortgage Support Scheme contact your lender to see if they are participating and you will also need to get independent money advice from a Homeownership Mortgage Support money advisor.

2. Is there help available to pay my mortgage?

Mortgage Protection Insurance

If you've lost your job or you're too ill to work, check whether you have 'mortgage protection insurance' to cover your payments. The payments may not start straight away - so contact your insurer as soon as possible.

Income Support on Mortgage Interest

If you are claiming certain benefits you may be eligible for help with mortgage interest payments after 13 weeks. This is know as Income Support on Mortgage Interest.

There is a limit of £200,000 on the amount of capital that Income Support can help with the interest on. This means that if the outstanding capital on your loan, or loans, is more than £200,000 then only the interest on £200,000 can be met through Income Support.

Where a mortgage is taken out partly for another purpose such as buying a car or providing a business loan, the Income Support scheme will only pay interest on the part of the loan associated with the house purchase or repairs.

See useful contacts for how to apply for Income Support on Mortgage Interest.

Other Benefits

Making sure you claim all the benefits you are entitled to such as Working Tax Credit, Child Tax Credit or Council Tax Benefit can help raise your income. To check if you are entitled to other benefits contact the Job Centre.

3.  My lender is trying to repossess my home

If your lender is taking possession proceedings get financial advice immediately from one of the advice agencies listed in Useful Contacts. If there is no time for this always attend the attend the court hearing and ask to see the duty Solicitor who will represent you. The worst thing you can do is not attend court as the judge may have no option but to agree to your home being repossessed.

Mortgage Rescue Schemes

The national mortgage rescue scheme helps households threatened with repossession:

There are two options:

• Shared equity - where a Housing Association provides an equity loan enabling the mortgage payments to be reduced
  
  
• Government mortgage to rent - where a Housing Association buys your property and rents it to you at a rent you can afford

To be eligible for these schemes:

• all other options must have been exhausted
• you must be at risk of repossession and threatened with homelessness
• all owners must agree to mortgage rescue
• the household must have a need to stay in the property and it is not practical to trade down
• the property must suit the needs of the household i.e. not be overcrowded
• owners must have had debt counseling and discussed alternative options
• you must not have a second home - including abroad

Additionally you must:

• be a pregnant woman or a person with whom she resides
• have dependant children
• be vulnerable due to old age, mental illness or physical disability or live with such a person

To apply for one of these schemes contact the Housing Options Service.

A number of private companies offer buy and rent back schemes - where they buy your home and rent it back to you. These schemes can mean the new landlord may increase your rent or could ask you to move after six or twelve months. Also if the company that buys your home gets into financial problems and cannot pay the mortgage you could be evicted. The Government Mortgage to Rent Scheme offers more protection, so think carefully before you sign up to one of these private schemes and firstly get independent advice.

Repossession Prevention Fund

Westminster’s Repossession Prevention Fund offers owner occupiers an interest free loan to reduce or clear their mortgage arrears to prevent them from having their home repossessed.  The loan needs to be paid back in full in 3 years.  The maximum loan is £5,000 and loans will only be made where there is no other way to resolve the problem. Anyone applying for a loan will need to have money advice from an independent money advisor.  

 To be considered for a loan the applicant must:

• be at risk of homelessness due to mortgage arrears and have a letter from the lender stating that repossession proceedings are being taken

• Have repayment difficulties caused by a change of circumstances i.e.  unemployment, sickness, drop in income, or any other circumstance considered reasonable determined by the Housing Needs Manager
• Have received money advice on their financial situation from a money advice and it is the view of the agency that the Hardship Fund is the best option
• All other options have been exhausted confirmed by the money advice agency

• Be in priority need for accommodation defined by the 1996 Housing Act

• Not have the resources to pay their mortgage instalments and/or arrears, or second charge payments, but be able to/or likely to pay them after the period of assistance provided by the loan has ended
• Not have a household income which exceeds £72k
• Not have a property worth more than £400k 

To find out more contact the Housing Options Service.

Useful contacts

Lender Pre Court Action Protocols

Civic Justice Council

www.civiljusticecouncil.gov.uk

Benefits Advice

Directgov

For advice on Benefits, Tax Credits and Financial Support

Tax Credits helpline: 0845 300 3900

Minicom/Textphone: 0845 300 3909

www.direct.gov.uk

Jobcentre Plus Office

Your local office can tell you if you are eligible for any state benefits including help with your mortgage interest:

St Marylebone Jobcentre Plus

46 Lisson Grove

London NW1 6TZ

Tel: 0207 941 6760

Textphone: 0207 853 4653

Kilburn Jobcentre Plus

3 Cambridge Avenue

Kilburn London NW6 5AH

Tel: 0207 853 3591

The Pension Service

Advice on Pension Credit and other benefits you might be entitled to if you are a Pensioner.

Tel: 0845 60 60 265

Minicom/textphone: 0800 60 60 285

www.thepensionservice.gov.uk

General debt and housing advice

Citizens Advice Bureau (CAB)

The CAB offers free, confidential advice face-to-face or by phone.

www.adviceguide.org.uk

Community Legal Advice

Community Legal Advice offers free information about legal problems and can put you in touch with local advisers.

Helpline: 0845 345 4345 (9.00am to 5.00pm Monday to Friday)

www.clsdirect.org.uk

Consumer Credit Counselling Service (CCCS)

CCCS offers free counselling on personal budgeting and advice about using credit.

Free Helpline: 0800 138 1111 (8:00am to 8:00pm Monday to Friday)

www.cccs.co.uk

DirectGov

Useful information and advice for people in mortgage difficulties.

http://mortgagehelp.direct.gov.uk/

Financial Services Authority (FSA)

The FSA is the UK's financial watchdog set up by the government to regulate financial services and protect your rights.

Consumer Helpline: 0845 606 1234

Minicom/Testphone: 08457 300 104

www.moneymadeclear.fsa.gov.uk

Housing Options Service (HOS) Westminster City Council

HOS provides general, free, housing advice about homeless options and homelessness prevention.

Address: 101 Orchardson Street London NW8 8EA

Tel: 020 7641 1000

Text phone: 020 764 8000

www.westminster.gov.uk/housing/housingoptions

National Debtline

National Debtline is a free, confidential service that gives independent advice about coping with debt.

Helpline: 0808 808 4000 (9:00am to 9:00pm Monday to Friday and 9:30am to 1:00pm Saturday)

www.nationaldebtline.co.uk

Shelter

For free help with housing, mortgage or debt problems.

Helpline: 0808 800 4444 (from 8:00am to 8:00pm Monday to Sunday)

www.shelter.org.uk/adviceonline