Help for struggling homeowners

Homeowners Mortgage Support
The Homeowners Mortgage Support scheme, launched today, will allow eligible homeowners who have suffered a temporary loss of income to cut their mortgage interest payments for up to two years to help them get back on track with their finances.

The scheme will allow lenders to reduce a borrower's monthly mortgage payments, with the postponed payments rolled up, added to the amount they already owe, and paid at a later date when the borrower's financial situation has improved.

This will give homeowners who are experiencing money problems the time to find a new job or to recover their income, without the added concern and stress of potentially losing their home.

Lenders offering Homeowners Mortgage Support will be protected by the government in case the borrower defaults.

Many lenders who are not offering Homeowners Mortgage Support are offering a comparable scheme. This means that more than 80 per cent of the UK the mortgage market will now be providing some form of enhanced support to their customers.

Borrowers who are interested in applying for Homeowners Mortgage Support, or finding out about comparable arrangements, should contact their lender to check their eligibility.

Housing Minister Margaret Beckett said: "We know that many families are worried about how to pay the mortgage right now, and we're determined to ensure there is real help available for them.

"This new support will help borrowers who just need a bit more time to get themselves back on their feet. The clear message to borrowers is to contact your lender straight away if you're concerned about how to pay the mortgage as often a solution can be found."

Homeowners Mortgage Support (HMS) could help if your household has had a temporary, unexpected drop in income and it’s harder to meet your mortgage repayments. Find out about the help available - you could be eligible to delay some of your interest repayments for up to two years.

Homeowners Mortgage Support – what it is

HMS will help people who are having difficulties meeting their mortgage repayments, but are likely to get their finances back on track in the near future.

For example, maybe you:

• are relying on one income instead of two
• can no longer work overtime
• have had your hours cut
• had two part-time jobs, but have lost one

If you are accepted for HMS, your lender will delay some of the monthly interest due on your mortgage. This will reduce your payments for up to two years. The money isn’t written off – you’ll have to pay it back eventually, with interest.

Who can get help from Homeowners Mortgage Support

To be eligible for HMS, you must have had a temporary drop in income and be unable to meet your monthly mortgage payments. You’ll need to switch to an interest-only mortgage, if you haven’t already. Your lender will also ask you to commit to paying as much as you can afford each month.

Your lender may have other conditions that you’ll need to meet. For example, they may say you should only have a small amount of savings. Talk to your lender about whether you qualify for HMS.

Check if your lender is offering HMS Not all mortgage lenders are providing HMS.

Lenders offering Homeowners Mortgage Support Who can’t get help

You won't qualify for HMS if:

• your lender isn’t offering HMS or equivalent support
• you own more than one home
• your income is unlikely to return to its previous level, perhaps because you have a long-term illness
• you have insurance that protects your mortgage payments
• your lender thinks you won't be able to keep up with your monthly payments, even if they are reduced
• you are claiming Jobseeker's Allowance - in this case you can claim support for mortgage interest (SMI) instead
  For more information about SMI, Read below.

Support for mortgage interest - Jobcentre Plus website Opens new window Talk to your lender about other options available
If you are not eligible for HMS, talk to your lender about other options that may be available. Even if you are eligible, your lender may decide HMS isn’t the best option. See ‘Mortgage worries - get advice to keep your home’ for more information about getting help with your mortgage.

Mortgage worries - get advice to keep your home How Homeowners Mortgage Support works
When you apply for HMS, your lender will usually refer you to an independent money adviser, like the Consumer Credit Counselling Service.If your lender doesn’t refer you, it’s still a good idea to go and see an adviser. They will make sure you understand how HMS will affect you and explain the risks along with the benefits. For example, you’ll be adding to your debt and you’ll end up paying more on your mortgage overall.

Lenders offering Homeowners Mortgage Support Going ahead with HMS

If you want to go ahead and your lender accepts you for HMS, you:

• will renegotiate your monthly payments with your lender and agree how much you can afford to pay
• will have to pay at least 30 per cent of the interest due on your mortgage each month
  can take advantage of the reduced repayments for up to two years
• must tell your lender if your financial situation changes at any time
• will have what you put off paying added to your mortgage balance
• will have to pay back this money, with interest, when you return to making normal repayments
• After a year, you'll have a review with your lender and an independent adviser. They will look at whether you are still eligible for HMS and it's the best option for you.

When you return to making normal repayments, you’ll need to agree with your lender how to repay what you owe. This may mean increasing your monthly payments or the length of your mortgage.