Government increases mortgage support to help house repossession victims
The government has lent a further olive branch to those staring at house repossession. The scheme is known as the Support for Mortgage Interest benefit which has been extended to cover mortgages up to £200,000 which is double the previous limit, but clearly does very little to a families London mortgage, it might cover a studio flat. The scheme is to help those who have lost their jobs pay the interest on their mortgage.
Apparently most people will qualify for the Support for Mortgage Interest benefit state support and the waiting period to qualify has also been reduced to 13 weeks, down from 39. The Work and Pensions secretary James Purnell stated “We have changed the rules to make sure even more people can get help with their mortgage payments if they lose their job. We have brought in changes as quickly as possible so people don’t have to wait too long for this support.”
Meanwhile The Council of Mortgage Lenders has predicted that up to 75,000 homes could be repossessed by the end of 2009 as unemployment rises due to the economic downturn.
The benefit covers mortgage interest payments and not the capital payments is only available if the claimant is already on some form of income support. So it looks like that if Mr and Mrs hardworking UK lose one job and aren’t on benefits then tough. In fact if a property was owned by a couple then it seems that both partners would have to lose their jobs and be on some kind of benefit to be able to apply. So the scheme is not so much an olive branch, maybe just an olive…
“It is only going to be of assistance to somebody who may be buying on their own or if both partners lose their source of income,” the CML spokesman said.
“So it will help a few home owners but not a huge number.”
Mr Purnell continued to tell the BBC that couples not on benefit would be able to get help under a separate government scheme announced in December allowing them to defer mortgage interest payments for up to two years.
“We want to make (house repossession) the greatest last resort it possibly can be,” Purnell said.
There are 11.7 million home loans outstanding in Britain, with an average size of 102,000 pounds, according to the CML.