A new mortgage rescue scheme which will help thousands of vulnerable people from losing their homes and avoid the nightmare of repossession will be officially launched today.

Under the nationwide scheme not-for-profit housing associations will buy homes from people struggling to pay their mortgage at an independently assessed market price.

Successful applicants would be allowed to remain in their property either as tenants paying an affordable rent or as owners after receiving an equity loan from a housing association to help cut their mortgage costs. Once their financial situation improved, they can pay back the loan in part or full.

The scheme, devised last year by the National Housing Federation (NHF) which represents England's housing associations and the Council of Mortgage Lenders (CML), will help up to 6,000 households, the government estimates.

-- Advertisement --

People applying for help under the scheme will have to meet a set criteria to be eligible for assistance. To qualify people are likely to have a family with dependent children, or with a disabled member, or to be elderly or vulnerable in some other way.

People will have to initially apply to their local authority for help, their finances will then be assessed by a designated agency, such as the Citizens Advice, before the property is valued and the housing association steps in to buy it.

It is hoped that the scheme will also serve to undermine the growing number of unregulated firms which buy properties from people struggling to meet their mortgage payments for well below the market rate and only allow them to remain in the property on a short-term tenancy.

The new scheme is being rolled out nationwide this month, but some housing associations already run their own initiatives along similar lines.

NHF Chief Executive David Orr said: "The mortgage rescue scheme will save thousands of vulnerable families from the nightmare of having their homes repossessed and give them the long-term stability they need.

"It will allow families to stay in their home either as rent paying tenants or as owners after receiving an equity loan from a housing association to help cut their mortgage costs. They will have the opportunity to repay the loan once their circumstances improve or when they sell their home".

"This scheme will also serve to undermine those shadowy companies currently making money out of people's misfortune by buying their properties at substantially less than the going rate - and then only letting them stay on a short-term tenancy basis."

(CD/JM)