Paying your mortgage

The Government has introduced some schemes to help homeowners who are struggling to keep up with their mortgage payments. As well as the schemes mentioned below there are other options you can consider if you are experiencing difficulties in making your mortgage payments.

The most important thing to remember is that you should seek help as soon as possible. Make sure you contact your lender as soon as you start having payment problems. There are details of other organisations that you can go to for free confidential advice: see ‘Useful Organisations - General, legal and money advice’ below.

Mortgage Rescue Scheme

This Government scheme is aimed at vulnerable households and is subject to a range of eligibility criteria including:

  • The value of your home should not exceed £305,000 (Government cap for London)
  • Your gross household income is no more than £60,000
  • There will need to be a certain amount of equity in your home

This scheme provides two options:

  1. Equity loan: This is when a housing association provides an equity loan to reduce your monthly payments. You will still own the property. You will repay the loan at a low interest rate and the loan will be secured on your home. You need no more than 40% equity in your property to qualify for this.
  2. Mortgage to rent: This is when a housing association buys your property at 90% of the market value and you then become the housing association’s tenant, and pay them rent, at 20% less than the market rate for the area.

The deadline for new applications to this scheme is March 2014. To find out more about this scheme see ‘Useful Organisations - Housing’ below.

Other options

If you are having problems paying your mortgage you might also want to consider:

  • Can you get a better deal on your mortgage? It may be worth speaking to other mortgage lenders to see if there is a better interest rate or mortgage package that could be available to you by remortgaging.
  • Can you change the way you pay any other debts that are not a priority?
  • Have you checked if you have mortgage payment protection insurance that you can make a claim on?

Income Support

If you lose your job and you can claim Income Support, Income-based Jobseeker’s Allowance or income-related Employment and Support Allowance, you may qualify to claim Support for Mortgage Interest (SMI). This is normally paid directly to your lender. For details, please apply via Jobcentre Plus or the Pension Service.

For customers making a claim from 5 January 2009 there is a waiting period of 13 weeks before help is provided at 100% of eligible mortgage interest. The capital limit up to which mortgage interest can be met is £200,000.

For details of who to contact for information about Income Support and other benefits see ‘Useful Organisations - Benefits’ below.

Other benefits

Make sure you check if you are eligible to claim any other benefits that you may be entitled to, such as Tax Credits or Council Tax Benefit.

For details of who to contact for information about benefits see ‘Useful Organisations - Benefits’ below.

Renting out your home

Renting your home may help to meet financial commitments, and can be another option if you are having difficulties selling it, but there are a lot of responsibilities if you become a landlord.

Some of the responsibilities you would need to consider include:

  • You must check you are not in breach of your mortgage agreement
  • If you take a deposit it must be protected properly
  • Your property must not present a risk to your tenant’s health and safety
  • All your gas and electrical appliances would need to be checked

LACORS (Local Authorities Co-ordinators of Regulatory Services) have produced a leaflet(pdf, 315KB) about renting out your home and where you can go for further advice.

Letting out a room in your home

You could consider letting out a room in your home to increase your income but if you let out part of your only or main home, and both you and the person you let to live in the same building, you may become a ‘resident landlord’.

You should seek advice about the implications of letting out a room in your home from the Citizens Advice Bureaux, a Law Centre or a Solicitor, see ‘Useful Organisations - General, legal and money advice' below.

There is also a leaflet available from Communities & Local Government: ‘Letting rooms in your home(pdf, 307KB)’.

Useful Organisations

General, legal and money advice

Citizens Advice Bureaux
Free, confidential advice face-to-face or by phone
Website: www.citizensadvice.org.uk

Community Legal Advice
Website:www.communitylegaladvice.org.uk
Telephone: 0845 345 4 345

Financial Services Authority (FSA)
Telephone: 0300 500 500
Website: www.moneymadeclear.fsa.gov.uk

Consumer Credit Counselling Service
Telephone: 0800 138 1111
Website: www.cccs.co.uk

National Debtline
Telephone: 0808 808 4000
Website: www.nationaldebtline.co.uk

Housing

Mortgage Rescue Scheme and other housing queries
Housing Options Team, London Borough of Richmond
Telephone: 0208 891 7409
Email: housingadvice@richmond.gov.uk

Shelter
Telephone: 0808 800 4444
Website: http://england.shelter.org.uk/get_advice

Benefits

Jobcentreplus - Income Support, Income-based Jobseeker’s Allowance and income-related Employment & Support Allowance and Council Tax Benefit
Website: www.jobcentreplus.gov.uk
Telephone: 0800 055 6688

Tax Credits – Working Tax Credits & Child Tax Credits
Telephone: 0845 300 3900
Website: www.hmrc.gov.uk/taxcredits

Pension Credit
Telephone: 0800 99 1234
Website: www.thepensionservice.gov.uk