Could the Homeowners Mortgage Support Scheme help you?

The Government have this month confirmed extra help for those struggling with mortgage repayments in the form of the Homeowners Mortgage Support scheme, but what does this mean for you and how can you make the most of it?

What is the Homeowners Mortgage Support scheme?

The HMS scheme has been introduced to help homeowners who experience a sudden drop in income that leaves them unable to meet their mortgage payments. The scheme will allow monthly payments to be reduced by up to 70% for a period of 2 years. Interest is still accrued during the period and added to the total debt to be paid once the mortgage holder’s income recovers.

The mortgage lenders who have agreed to help to their customers through HMS are:
Bradford and Bingley, Cumberland Building Society, Lloyds Bank Group, National Australia Bank Group, Northern Rock, and Royal Bank of Scotland have agreed to participate in the scheme. Lenders who have not agreed to participate have pledged to offer similar assistance.

Who qualifies for the scheme?

To qualify for help under the HMS scheme, you must have purchased your home before 1st December 2008, have a mortgage of less than 400,000 and savings of less than 16,000.

The reduction in your income must be also be temporary, with a good chance that you will be able to meet the full repayments again in the near future. If all householders are unemployed, you may qualify for Mortgage Interest Support from the Department of Work and Pensions instead.

The HMS scheme isn’t available for buy-to-let properties or for second homes.

How can I take advantage of the scheme?

If you have experienced an unexpected drop in income and are having trouble meeting your mortgage repayments, the first step should be to talk to your lender and find out whether they can temporarily reduce your payments – the scheme is only available once you have taken this step.

Next, talk to an independent money adviser, like the Consumer Credit Counselling Service about your situation. They will be able to take you through the ramifications of joining the scheme and help you apply to your bank if you decide to go forward. You will then be able to negotiate your monthly payments with your lender.

What do the experts say?

Housing Minister, Margaret Beckett told the BBC:

“The idea of this is to try and help people who haven’t lost everything, and who aren’t going to be eligible… to be re-housed under homelessness legislation, but who nevertheless are having difficulties. Maybe one of them has lost their job but not both, maybe it’s just that they’ve lost their overtime, but one way or another… they are struggling with the mortgage level payments that they could meet before.”