The government has announced a raft of extra support for homeowners who are struggling to pay their mortgage or are in danger of repossession.
In the pre-Budget report the chancellor outlined an extension to schemes assisting homeowners with their mortgage repayments and reiterated the necessity for lenders to use repossession as a last resort and offer borrowers alternative means of making repayments.
The first scheme to benefit will be that which covers the monthly interest payments for struggling borrowers who have been out of work for at least 13 weeks. Currently the scheme only applies to mortgages worth up to £100,000 but from April will apply to those up to £200,000. The maximum rate of interest that can be covered will continue to be 6 per cent.
The second is the government’s mortgage rescue scheme through which struggling borrowers can sell their homes and rent them back. Up until now this would only apply to the principal mortgage but from now on will be able to be used for equity release.
The chancellor also re-affirmed that repossession should be a last resort. He said that borrowers should be given three months’ grace before repossession proceedings were initiated. Lenders should also pursue alternative solutions such as restructuring payments or offering payment holidays.
The measures have been welcome by residential property solicitors including David Briffa, a partner at London firm Child & Child. “Aside from the emotional cost, given that the taxpayer has to foot the bill if people are made homeless, it makes sense to use that money to keep people in their own homes.”
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