Homeowners Mortgage Support starts today

Homeowners Mortgage Support (HMS), launched today, is designed to help homeowners keep in their homes even if they have suffered a temporary loss in income.

It is designed to ensure that respossession really is a last resort for homeowners.

HMS gives homeowners the opportunity to defer up to 70% of their monthly mortgage interest payments for up to 2 years.

This sounds positive support from the Government.

There are criteria that have to be met though in order to qualify for the Homeowners Mortgage Support scheme:

• Have an oustanding mortgage of less than £400,000
• Have less than £16,000 in savings
• Be an owner-occupier – HSM is not available for buy to let or investment properties
• Be able to make a minimum contribution of 30% of the total mortgage interest payment
• Have been making regular payments for at least 5 months, have bought their home before 1 December last year.
• Have talked through options with mortgage lender
• Have sought independent money advice

Not all banks and building societies are supporting this scheme.

Banks participating are Lloyds Banking Group (Lloyds TSB and Halifax Bank of Scotland) and Royal Bank of Scotland (NatWest and Ulster Bank), Northern Rock, Bradford & Bingley and National Australia Bank Group (Clydesdale and Yorkshire Bank).

Lloyds Banking Group have welcomed the scheme.

Dan Watkins, their managing director of mortgages commented ‘We will participate in the Homeowner Mortgae Support Scheme from today. We already do everything we can to help customers facing financial difficulty and this newest scheme will act as an extendion to the broad assistance we offer customer who are struggling to pay their mortgage.’

He added ‘Most importantly the scheme will offer welcome additional support to families that have suffered temporary loss of income to ensure they can stay in their homes.’

Whilst not part of the Government HMS scheme, Barclays, HSBC and Santander (Abbey and Alliance & Leicester) have confirmed they are offering comparable arrangements to their customers.

The only building society currently participating is Cumberland Building Society.

However, Paul Broadhead, Head of Mortgage Policy at the Building Society Association which represents all building societies in the UK, said ‘Borrowers should have every confidence that, if they are a customer of a building society, the Customer Commitment means they will receive at least as much help as available under the HMSS.’

Borrowers who do qualify for the scheme and take advantage of it must remember that the mortgage interest payments deferred are rolled up into the total debt outstanding. This will all have to be paid at a later date.

An alternative way of protecting your mortgage payments in case you are unfortunate to lose income is to take out Payment Protection Insurance, or PPI as it is often referred to.

PPI can be purchased for a competitive price and can provide monthly replacement of income in the event of being made redundant or being off work for a long time because of sickness or an accident.