"Mortgage Holiday" - The INS and OUTS
Homeowners hoping to avoid repossession under the Government's “mortgage holiday” proposals must meet a series of qualifying criteria that could mean fewer than 10,000 are likely to join the scheme.
The Homeowner Mortgage Support Scheme, which was announced last week by Gordon Brown, offers households that suffer a “significant and temporary loss of income” as a result of the recession the chance to defer a proportion of the interest payments on their mortgage for up to two years.
Yesterday the Treasury said that the scheme would be open only to households with a mortgage of less than £400,000, estimated to be about ten million borrowers.
About 1.7 million households will not qualify, including borrowers with a second charge against their home and those with a buy-to-let deal.
Borrowers who apply can also hold no more than £16,000 in savings and will need to already be in arrears on their monthly payments. It was also revealed that borrowers would be required to speak to a debt adviser, such as National Debtline or Citizens Advice, before approaching their lender.
Debt charities will be expected to assess whether a homeowner qualifies and to establish whether they will be able to begin repaying the debt in the near future. However, the final decision will rest with the lender.
Last night it emerged that the UK's eight biggest lenders, including HBOS — owner of Halifax — Abbey and HSBC had not offered concrete assurances that they would sign up to the scheme.
The lenders have agreed only “in principle” to the idea but are expected to come under further pressure at a meeting with ministers due today.
It is also estimated that sub-prime lenders, who are considered to be responsible for approximately half of all repossessions, will not join the scheme.
www.timesonline.co.uk
(Wednesday, December 17, 2008)