The Government has announced a new scheme to help people who suffer a temporary loss of income stay in their home. The scheme will apply to mortgage holders who have mortgages up to £400,000. The ten biggest mortgage lenders have nodded approval to the scheme but they’re all saying ‘we need more details’. The devil may well be in the detail!
The new Homeowner Mortgage Support Scheme will enable households that experience a significant and temporary loss of income as a result of the economic downturn to defer a proportion of the interest payments on their mortgage for up to two years. The Government will guarantee the deferred interests payments in return for banks’ pariticipation in the scheme.
The Government will work with lenders over the coming days to develop the scheme in detail, with a view to it being available to customers early in the New Year. The country’s eight largest banks have already pledged that they will work with the Government to develop the scheme.
The Chancellor said:
“This is real help for homeowners at risk of repossession through no fault of their own. The scheme will give people who face a temporary fall in their income the confidence that they need to rearrange their finances so they can come through a difficult period without losing their home.”
Housing Minister Margaret Beckett said:
“We are determined to do everything possible to ensure that hard working households have the option to stay in their homes, if they suffer a loss of income during the downturn. This scheme will give households the breathing space to get back on their feet again and help ensure they do not face or fear repossession.
It shares the risk of home ownership at this difficult time across all the partners – the Government, the lenders and the borrowers. We want to see all lenders signing up to this scheme as part of their efforts to ensure that repossession is always an absolute last resort.”
Our opinion at Insurance Blog is that if the Government introduced their own captive mortgage payment protection insurance scheme utilising the skills of or plagiarizing the model of a large independent supplier such as British Insurance Ltd, and incorporated it into the National Insurance system then they wouldn’t be in the situation they now find themselves – having to underwrite mortgage payments after the event at the taxpayers expense.
Similarly it is a National Security issue if we were to see large scale repossessions of homes and we welcome these proposals as a line of economic defence.
Moreover we’re looking forward to further interest cuts today!!