As we mentioned in our previous article, Scottish Mortgage Rescue Schemes can help homeowners save their home. However, these “rescues” can cause homeowners to lose ownership over their homes or to get further in debt. This article will look into some of the questions you should ask yourself before signing into a rescue scheme.

What are the risks?

As with any financial investment, because that is what these schemes are, there is a risk. Not all mortgage rescue schemes are run by the government or have your best interest in mind. Some mortgage rescue schemes are just a way of making a profit from the financial distress of homeowners.

Take special care when entering a privately run program that promises immediate, easy solutions for your housing problems. Avoid those schemes like the Black Death. Even reputable schemes will offer to buy your home at discounted prices well below the market value, as much as 20 percent below the market value. If this does not pay off your mortgage you could find yourself without a home and still owing on your mortgage.

Other schemes will buy your home and allow you to rent it back from them but only offer short assured tenancy agreements. Avoid these schemes because they provide you with very little protection if your new landlord decides to evict you. Unless you have a clear assured tenancy agreement with your landlord, you can be evicted without a reason as long as correct procedure is followed.

Happily, the government provides sponsored mortgage rescue schemes that provide long to indefinite assured tenancy agreements, stick with them.

Who runs the Mortgage Scheme Program?

This question is directly linked with our previous question. There are three types of mortgage rescue scheme sponsors: not-for-profit agencies, mortgage lenders or private for-profit companies. Not-for-profit agencies such as your local council or a charitable housing association offer the best terms and put the interests of homeowners first. Mortgage lenders may offer interesting deals to their customers to avoid the lengthy and expensive ordeal of repossession. However, read the small print of any agreement carefully before signing. Finally, avoid private, for-profit companies that promise to buy your home and pay your mortgage with schemes that sound too good to be true, because they are.

How can I find a good mortgage rescue scheme?

Contact your mortgage lender. It is in their interest to provide you a loan modification or to restructure your mortgage if you can afford reduced payments. So, it is worth asking if they provide some kind of mortgage rescue scheme.

You can also contact your local council and ask if they operate a mortgage rescue scheme or if they know about a program in your area. Click here for a list of local councils and their contact details. If your situation is critical you can also apply for a mortgage to rent scheme with your local council.

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