Introduction to the Mortgage Rescue Scheme
A mortgage rescue scheme could offer an immediate solution for someone in financial difficulties, as well as providing a viable way of remaining in your home, long-term. If the financial predicament is merely temporary, it may be possible to negotiate reduced payments with lenders for a few months; however, for those with longer term difficulties a more radical approach may be necessary.
Mortgage Rescue Scheme - An Overview
Mortgage rescue schemes are run and managed mainly by local councils and housing associations, although some private lenders also offer a scheme, in certain circumstances. Simply put, a mortgage rescue scheme involves the council, association or lender purchasing your property from you and then allowing you to live in the property in exchange for rent.
Whilst this, of course, means that you are no longer the house owner, it does mean that you are able to pay reduced monthly amounts without having to move home. If the market value of the property is higher than the value of your mortgage, you might even find that you are left with a chunk of equity which can assist to clear other debts you may have.
More Details on Mortgage Rescue Schemes
As well as an outright purchase, many housing associations and councils also offer a shared or part ownership option whereby they purchase a proportion of your property. You then pay a smaller mortgage and a smaller rent amount which, in total, should be less than your current mortgage.
In most schemes, it is possible for the individual to repurchase their property at a later date if their situation improves. Bear in mind, however, that any gain in the value of the property will have to be taken into account.
Eligibility for a Mortgage Rescue Scheme
Typically, the type of people who may be eligible for this scheme include those who have had a large reduction in income (but are, nevertheless, still able to make small monthly payments), those who have minimal mortgage arrears, who need to stay in their current area due to commitments such as school / work, or when the property is in an area where there is a shortage of council accommodation.
If you are keen to stay in your current home but cannot make the monthly payments, a mortgage rescue scheme may be ideal;
provided by housing associations and councils as well as some lenders, a mortgage rescue scheme allows the individual to sell their property but to carry on living there;
strict eligibility criteria exist and anyone interested in this type of scheme should contact the relevant bodies to see if the scheme is available to them.