The government this morning announced a £200million mortgage rescue scheme that may help around 6,000 homeowners facing repossession. This new initiative is aimed at stopping thousands of vulnerable homeowners from losing their homes in England and will start from this Friday. The scheme is primarily targeted at families with children, the elderly, the disabled and households that have an income of less than £60,000 per year. This scheme will be available through local authorities. Scotland, Wales and Northern Ireland will shortly be announcing their own initiatives.

It is thought that the non-profit housing associations in England will buy the homes from homeowners who are about to lose their homes through repossession. Each case will be independent accessed and the homes will be bought by the housing associations at the market price. Applicants that are successful will be able to remain in their homes as tenants and will then pay an affordable rent. The non-profit housing associations will also offer homeowners a loan similar to the shared ownership scheme. They will purchase a share in the home and rent it back at an affordable rent. Homeowners will be able to buy back the share initially sold when their circumstances improve and their finances are resolved

Margaret Beckett, the Housing Minister said on the BBC Radio 4’s Today programme that “This is a scheme to help the most vulnerable families who if they lose their homes and it is repossessed would have a legal right to be rehoused by their local authority.”

Previous Government Help and Solutions provided

This new initiative announced to day is in addition to the Support Mortgage Interest Scheme (SMI) which Alistair Darling announced late last year and came into effect on the 5th January 2009. This package shortened the waiting time for Support Mortgage Interest (SMI) from 39 weeks to 13 weeks and increasing the capital limit to £200,000.

Gordon Brown’s recent announced that his government would underwrite a £1 billion scheme which he had agreed with eight of the largest mortgage lenders. This scheme will be available to anyone who loses their job or suffers from a loss of income. For example: a couple where the main bread winner has been made redundant and their partner continues to work, but they are struggling to pay the mortgage. Under this scheme any household with a mortgage of up to £400,000 will be able to defer some or all of their interest only payments on their mortgage for a period of no more than two years. To further qualify for this scheme you should have less than £16,000 in savings.

I do not believe that a £200million mortgage rescue scheme will be enough it might just be a start. This government has already thrown around £400 billion at the Banks in a serious attempt to rescue them. This new initiative should help to provide long-term stability to vulnerable homeowners who are losing their homes. This latest government initiative will also help the housing market from a flood of repossessed homes flooding on to an already depressed housing market with falling house prices. This initiative should protect homeowners from having to sell their homes to unscrupulous buy and rent back companies. Your thoughts, experiences and comments are welcome.