CHARLOTTE PERCIVAL takes a closer look at the Government’s new mortgage rescue scheme.

THOUSANDS of families facing the threat of repossession could be offered a helping hand by a new mortgage rescue scheme.

The £200 million scheme will benefit 6,000 households nationally and has been rolled out by the Government in the hope that people struggling to pay their mortgages will be able to stay in their homes.

Local authorities will make initial assessments and eligible families could then sell a share of their home or the whole property to a housing association, which would charge them rent to live there.

Christine Storrs, chief executive of York Housing Association, said the scheme could reduce a family’s outgoing and rebalance their finances. If their situation later changed, they could buy their property back.

“It’s there for people who have genuinely found themselves in difficulty in terms of paying their mortgage and to prevent people having their homes repossessed,” said Christine.

“The idea is that people who have got into difficulties can go to their local authority and have an assessment to see what their finances are and what their issues are and what their mortgage repayments are. They will also look at what the property is worth and really reach a decision about whether they are one of the families who can be helped.”

The rescue scheme is targeted at households with incomes of less than £60,000 a year who would be entitled to be rehoused under homelessness legislation because they are elderly, disabled or have children.

The Council of Mortgage Lenders has predicted that 75,000 homes will be repossessed in 2009. About 200,000 people are at least three months behind on mortgage repayments.

Christine said the scheme offered a way of “riding the storm”.

“It might be for three or four or five years but if your situation improves you haven’t completely given up being part of a home ownership,” she said.

“It’s not going to be able to help everybody and it’s very early days but I think it’s excellent.

“I think anything that means people will be able to stay in their homes will mean families won’t have to go into temporary accommodation, their children will be able to stay at the same school and keep that stability and there will be less pressure on the local authority to find accommodation for people.”

The mortgage rescue scheme forms part of a wider package of help for home-owners hit by the current economic downturn.

This month, the waiting period before homeowners who lose their jobs qualify for state help with mortgage interest payments was cut from 39 weeks to 13.

Ministers are working with lenders on a Homeowner Mortgage Support Scheme, which will allow households who suffer a sudden drop in income to defer part of their payments for up to two years. Steve Broadley, of the Mortgage Advice Centre in Skeldergate, does not think it will make an impact.

The CML has already warned that lenders would need to set aside more capital to support borrowers on the scheme, he said, and the money might otherwise be used for new lending, so new applications might be turned down.

“I’m not convinced it’s going to have any great impact,” he said. “Looking at the numbers it’s going to help, it’s quite small.”

Meanwhile, the Golden Triangle Partnership – between Leeds City Council, City of York Council and Harrogate Borough Council – has launched its own mortgage rescue scheme, called HomeSave Plus.

It aims to save up to 60 families from losing their homes and complement the Government’s national scheme.

Bill Hodson, director of housing and adult social services at City of York Council, said: “The priority now is to make sure that vulnerable people with more limited incomes have every chance to hang on to their homes in this very difficult period.

“The Government has announced a national mortgage rescue scheme but we have taken the initiative to set up an additional scheme for local people – HomeSave Plus – which reflects the particular problems that homeowners face in our area.

“Preventing homelessness is a key council responsibility and with this funding we will be able to help many people stay in their own homes.

“That’s good news for those families and for our local communities.”

• For more information about HomeSave Plus, phone the Golden Triangle Partnership on 0113 2475885.


Rescue packages ‘won’t help’

RESCUE mortgages will do nothing to help the housing market, says York estate agent Kevin Hollinrake.

“I think it will help some people who need help and I’m in favour of that, but the principle problem is about funding for new borrowers and this new scheme will not solve this problem,” said Mr Hollinrake, managing director of Hunters.

“All the problems will continue until the Government gets the banks to lend or uses the banks we do own to start lending to first-time buyers. Unless you get the housing market back on its feet, the rest of the problems won’t go away.”

Better than losing your home

SELLING shares in your house to a housing association would be better than losing it altogether, believes homeowner Michelle Lancaster.

Michelle, 27, bought a house in Leeman Road with her fiancé, Russell, in 2006 and their repayments have risen steeply in recent months.

Michell says she thinks the scheme would be good for people who were struggling and if she had to, would consider it herself.

“I think there would be nothing worse than losing your house that you’ve worked so hard to get,” said Michelle, a graphic designer.