Housing Minister Grant Schapps recently announced the creation of a £20 million financial safety net to help protect struggling homeowners from mortgage repossession. Unfortunately, repossession is often the last resort when the homeowner can’t meet his or her mortgage loan obligations.
The new fund, referred to as the Repossession Prevention Fund, provides councils with the option to offer small, interest-free loans to homeowners in danger of mortgage default. The fund hopes to ensure that court desks will offer on-the-day advice to those facing repossession and will help them to avoid repossession in most of the cases.
Housing Minister Schapps encouraged any homeowner facing financial difficulties to seek and use free, independent advice to get assistance and avoid losing a home.
The Repossession Prevention Fund includes:
In some cases, lender application for possession orders is suspended or rejected when the householder at risk has access to on the day advice. Last year, more than 30,000 households received help from court duty desks.
In addition to the new Repossession Prevention Fund, Mr. Schapps authorized a £19 million capital infusion to the councils. The funds ensure the councils’ ability to provide real financial support to people facing the threat of losing a home.
Monies from the Repossession Prevention Fund are being allocated to all local housing authorities in England. The fund allows them to offer the struggling homeowner a small, interest-free loan of less than £5,000 or, in some cases, a grant to allow the homeowner some financial breathing room.
UK homeowners need the right advice about managing debt on a timely basis. Legal and financial assistance intends to help homeowners to get control of current debt. Knowledge and financial support can help at-risk homeowners to better manage finances in future.
Housing Minister Schapps encourages local authorities to work flexibly and innovatively with homeowners, lenders, and other local authorities. The Repossession Prevention Fund must be sustainable as local counties target and tackle threats of repossession in their area. He said:
It’s important to get advice as soon as possible. Even if the homeowner faces a court hearing, repossession isn’t a foregone conclusion. The Repossession Prevention Fund hopes to ensure that no homeowner is left stranded. He or she should have on the day legal advice to save the home from repossession.
According to the Council of Mortgage Lenders, the number of repossessed properties is declining and is at the lowest level since 2007. However, it’s important for the Government to tackle current deficit levels and rising interest rates.
Homeowners with certain mortgage loans might face rapid mortgage payment increases if interest rates rise too quickly. Fortunately, more homeowners carry a lower mortgage interest burden today. Mortgage interest is at the lowest proportional levels since these records began.
In addition, the Government is investing £200 million or more into the Mortgage Rescue Scheme. The scheme is designed to offer more resources to families facing home repossession. It is available through local authorities.
The Directgov website at www.direct.gov.uk/mortgages is a valuable homeowner resource. Homeowners facing repossession should use the Directgov site for free information and advice. Organisations such as the National Debt Line and Citizens Advice are also recommended to homeowners struggling to pay mortgage loans.