The government scheme to help people stay in their homes if they lose some or all of their income will not start until April it was announced on Friday.
This follows the announcement the same day that the number of homes repossessed had risen by 54% in 2008 to 40,000. Repossessions in 2009 are expected to reach around 75,000.
The Homeowners Mortgage Support Scheme was announced in December last year, but the Government only published final details of the scheme’s design on Friday.
It has been criticised for giving homeowners facing problems “false hope”, by announcing the plan so far in advance of it becoming available.
Under the scheme, homeowners who lose some or all of their income will be able to defer up to 70% of their mortgage interest payments for up to two years.
The Government said it had been working “intensively” with lenders, including the eight major players who had already offered in-principle support for the scheme, as well as trade associations and money advice groups to finalise the scheme’s design.
Under further details of the Homeowners Mortgage Support Scheme announced on Friday, the Government said people would not be able to enter the scheme unless they had been making regular payments in agreement with their lender for at least five months.
They must also be able to afford to continue to pay at least 30% of the interest on their loan each month.
They can only take part in the scheme, which covers mortgages up to £400,000, if all other options have been exhausted, if they are not eligible for Income Support for Mortgage Interest and have less than £16,000 of savings.
The scheme is only open to owner-occupiers, and not buy-to-let landlords, and people must have bought their home with a mortgage before December 1, 2008.
In exchange for lenders agreeing to defer a portion of people’s interest payments, the Government will guarantee up to 80% of the money owed, which will be added to the homeowner’s mortgage.
Find out more about the HMSS here.
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