Can the Mortgage to Rent Scheme Help you?
by Ritchie Mehta (27 April 2009)
Figures from the Council of Mortgage Lenders suggest that in 2009 around 75,000 will have their homes repossessed. This marks a startling increase of around 300% from 2007, the likely cause being the demise of the property market coupled by the current economic conditions, which is causing many to lose their jobs or take wage cuts.
But help is at hand for those in difficulty as the government takes action bringing in a £200 million mortgage rescue package to help people through hardship while still being able to keep their home.
How does the scheme work? Well firstly to be eligible for the scheme you must meet a number of qualifying criteria. These include:
• If you are pregnant
• Have dependent children
• Vulnerable due to age or a physical or mental impairment
For more details of the qualifying criteria visit www.direct.gov.uk.
Essentially, the government uses two programs to help you. The first is the ‘Shared Equity Loan’ where the Government will pay a proportion of your mortgage in return for a percentage of equity in your home. Secondly, the mortgage to rent scheme whereby the government pay your entire mortgage for you and you rent back the property as a tenant at a more affordable rate.
Scotland has its own version of the mortgage to rent scheme and shared equity schemes which is due to expand over the next few months. So if you are North of the border and think you may be eligible for the programs contact your local Citizens Advice Bureau.
One of the big downsides of these schemes is that it is only estimated to help around 6,000 in the next 2 years, which is a drop in the ocean when compared to the repossession statistics. In addition, at the moment it is unclear how many individuals the scheme has actually helped, however time will tell if they will slow the number of repossessions in the marketplace.