Mortgage rescue is part of the government response to the econominc downturn and is designed to prevent vulnerable home-owners who are eligible from becoming homeless due to repossession.
The housing market downturn and current economic climate has created a challenging environment for homeowners. The Homes and Communities Agency is committed to working with our delivery partners, central and local government, lenders and voluntary agencies in order to help applicants facing the prospect of repossession.
In September 2008 the government announced a Mortgage Rescue Programme to support vulnerable owner-occupiers facing repossession to remain in their home. This funding is distributed by the HCA to partner providers who will add their own resources (supported by rent or equity loan charges).
We now have over 150 partner providers signed up to offer mortgage rescue across England, extending the coverage for those who are eligible to be supported by the scheme to be able to access it.
The Mortgage Rescue Programme comprises of two distinct options, shared equity, where the household remains as a homeowner and Government Mortgage to Rent, where the household becomes a tenant of the housing association.
The property is purchased by the housing association and let to the household on an Assured Shorthold Tenancy with rent charged at 80% of market rent.
Guidance to providers of mortgage rescue can be found in the Capital Funding Guide or the Mortgage Rescue Toolkit
The household’s existing secured debt is reduced to an affordable level by an equity loan provided by the housing association. The equity loan is secured as a second charge with an interest charge of 1.75% per annum. This fee will rise by RPI + 0.5% per annum.
The Mortgage Rescue Toolkit provides information on the scheme for organisations providing mortgage rescue to eligible households. It contains detailed information on the two options available, and also a set of standard documents which can be used when processing applications.
Financial Appraisal Model - XLS (218KB)
Information on how to apply is on the Directgov website.
Last updated: 31 March 2010