Homeowner Mortgage Support

Ruth Stanier outlines the new Homeowner Mortgage Support scheme, which was launched to the public on 21st April 2009.

Rescue comes in for the most vulnerable, as well as income support to help the Households taking unemployed to cover the interest on their In total, lenders covering advantage of HMS are mortgage payments. 80% of the mortgage able to delay some of HMS is the latest piece of this puzzle. market have agreed to the interest due on their It’s aimed at helping households which offer HMS or comparable experience an income shock as a result mortgage for up to two of the recession. That could include, for arrangements. years. example, households which now have to rely on one income rather than two or people who’ve seen their hours cut back. Following a successful launch of the Households taking advantage of HMS are In total, this means that lenders covering Government’s mortgage rescue scheme, able to delay some of the interest due 80% of the mortgage market have agreed to Homeowner Mortgage Support (HMS) on their mortgage for up to two years. offer HMS or comparable arrangements. is now also available for households The money postponed has to be paid Households must show that their income struggling to keep up with their mortgage back eventually. But this delay gives the has dropped, but be confident that this is payments. The first lenders offering HMS or household breathing space to get their only temporary. They will need to commit comparable arrangements began offering finances back on track without the extra to paying as much as they can afford each st this support on 21 April, and more will pressure of worrying about repossession. month and at least thirty per cent of the soon follow suit. So who will it help, and In effect, HMS is a type of ‘extended interest due. what do you need to know in order to best forbearance’ giving people longer than support your clients? usual to get back on their feet. For lenders offering HMS with the Government guarantee, the borrower As the effects of the economic downturn The lenders already offering HMS are: must: start to bite, more people are worried Lloyds Bank Group (which includes about keeping up with their mortgage l Have bought their home before 1st Halifax, Bank of Scotland and Cheltenham December 2008. repayments; and in some instances, and Gloucester); Northern Rock; the losing their home. We can all empathise (which includes l Be an owner-occupier - the scheme is with those families; we’re all aware of NatWest, , the One Account, not open to buy-to-let or investment the effects on people’s job prospects and (UK) and Direct Line); Bradford properties. their physical and mental health. We and Bingley (includes Mortgage Express); l Have an outstanding mortgage of less all understand the consequences of the Cumberland Building Society; and the than £400,000 and savings of less uncertainty and upheaval on individual National Australia Bank Group (which than £16,000. families, with parents uprooted from their includes Clydesdale and Yorkshire Bank). l Have a regular household income and local community, and children having to Bank of Ireland (which includes Bristol should be able to make a minimum move schools. And we know this has a and West), GMAC, GE Money, Kensington contribution of 30 per cent of the total wider impact, reducing people’s overall Mortgages, the Post Office and Standard interest payment. confidence in the housing market and in Life Bank will be offering HMS as soon as l Have talked through other options the economy more generally. possible. with their lender and have been That’s why preventing repossessions These lenders have the security of a making regular payments for at least has been a major focus of Government Government guarantee if the borrower five months before applying – though policy over recent months. The approach defaults. not necessarily of the full amount due, has been three-fold. Firstly, the legal if that had been agreed with their protection available to homeowners has Barclays (including First Plus), HSBC, lender. been strengthened. For example, new Nationwide and Santander (including Borrowers interested in finding out more rules have been introduced in the courts Abbey and Alliance and Leicester) will offer about the comparable arrangements stressing that repossession must always comparable arrangements to HMS to their should contact their lender in their first be a last resort. Secondly, the Government customers, while opting not to take up instance. has invested in debt advice services, to the Government guarantee. Customers of make sure households in difficulty have these institutions experiencing a reduction If households are eligible, and have easy access to practical help. And thirdly, in income and willing to make regular explored all other forbearance alternatives, various schemes have been developed or monthly payments will receive a similar their lender will refer them to one of the extended, targeting households in different level of support and be encouraged to seek organisations offering tailored advice circumstances. That’s where Mortgage independent money advice. on HMS. This is an essential part of the

 quarterly account summer 2009