Mortgage Rescue Scheme

Photo of houses on Regency View, Sandwell This page sets out details of one of the measures in the wider package of measures designed to prevent vulnerable families losing their homes.

If you are a homeowner and are worried about repossession or keeping up with your mortgage repayments you should first read the help and advice available from the DirectGov - keeping your home (external link) website.

See also information about Homeowners Mortgage Support.

What is it?

A £285m package of measures designed to prevent some of the most vulnerable families losing their homes and experiencing the trauma of repossession. This scheme is aimed at those who would be eligible for homelessness assistance and is subject to a range of eligibility criteria. For further information on these and other details about the scheme please read the frequently asked questions page.

Our mortgage rescue package has two elements:

Shared equity
This is designed to help householders who have experienced payment shocks and need some help in paying their mortgage.
Government Mortgage to Rent
This is designed to help the most vulnerable households on low incomes with little chance of sustaining a mortgage.

Why are we doing it?

The international market turbulence is creating a challenging environment in the housing market, interest rates have risen and the government is determined to take action to help those facing repossession. These measures build on our existing work, which includes £10 million for debt advice and an expanded network of court desks to provide legal advice for households at risk of repossession.

How will it work?

Mortgage Rescue operates by bringing together local authorities, Registered Social Landlords (RSL), lenders and debt advice agencies. The two elements work in the following ways:

Shared equity - RSL provides an equity loan enabling the householders' mortgage repayments to be reduced.
Government Mortgage to Rent - RSL clears the secured debt completely and the applicant pays rent to the RSL at a level they can afford.

The level of grant to a RSL will be determined using the Homes and Communities Agency's value for money assessment criteria after a Money Adviser has advised on the most appropriate route after establishing a household's affordable housing costs.

Who will it help (and how many)?

This Scheme is subject to a set of eligibility tests. The eligibility criteria can be found on the frequently asked questions page. Depending on individual circumstances, there are two possible options for those eligible:

Shared equity
Those who have an equity share in their homes and are facing a payment shock from remortgaging and/or higher living costs but likely to retain current income.
Government Mortgage to Rent
Those who are unable to meet lenders' requirements eg those on unstable incomes. Those who are more suited to social tenancies.

We have worked with the Council of Mortgage Lenders (CML), the Homes and Communities Agency, the National Housing Federation, local authorities, Money Advice agencies, and RSLs to develop the mortgage rescue proposal.

It was announced as part of the 2009 Budget that the scheme was being expanded to help people in negative equity (where the total of their secured loans exceeds the value of their property) from 1 May 2009. Households that have debts that are up to 20 per cent greater than the value of their home are now able to apply for the scheme (provided all other eligibility criteria are met).

The scheme aims to help up to 6,000 vulnerable households over two years.

When is it available?

Communities and Local Government has worked alongside experts from the lending sector, local authorities, money advice sector and Registered Social Landlords to ensure that the Mortgage Rescue scheme was available as quickly as possible. Housing Minister Margaret Beckett announced on 16 January 2009 that this scheme is now available in all participating local authorities. If you believe you are eligible you should contact the housing team at your local authority (council).

Should you have further questions please refer to the frequently asked questions page.