The Welsh Assembly Government manages the Mortgage Rescue Scheme in Wales. Its main purpose is to provide aid to residents who are owner and occupiers of and who are at risk of losing their homes to a repossession.

How does the Mortgage Rescue Scheme Operate?

The Mortgage Rescue Scheme provides eligible homeowners with two options. Those homeowners who are struggling to make their payments but could afford reduced monthly payments are given the opportunity of applying for a housing association equity loan that will help reduce their monthly mortgage payments. Homeowners who cannot afford the reduced mortgage payments can sell their home to the housing association and remain in the house as tenants. Which option is best for you will depend on your personal circumstances.

All participating housing associations must be registered with the Welsh Assembly Government. Ultimately the housing association will request the Assembly for a grant if you decide to sell them your house in exchange of tenant rights over your home. Please note this program is not designed to help all applicants as funds are limited. The Scheme will focus on providing assistance to those households that need it the most.

Is It a Good Idea For Me?

It depends. The Mortgage Rescue Scheme is not the best option for everyone. Remember, if you choose to apply for an equity loan your debt will increase although your monthly payments will be reduced. This means your overall interest payment could actually rise. If, on the other hand, you decide to sell your home and remain in it as a tenant, you will no longer be the owner of your home. This means you could be evicted from your home if you do not follow the housing association’s rules and make your monthly payments.

If you are going through a temporary financial setback, you may be able to negotiate a settlement directly with your lender. The Mortgage Rescue Scheme should be seen as a last resort when you cannot come to a suitable arrangement with your lender. Repossessions are expensive and time consuming, so most lenders will consider loan modifications and mortgage refinances before repossessing a home when the borrower is willing to work towards an agreement.

In any case you should talk to an independent finance or mortgage consultant before making serious decisions in relation to your mortgage. In our next article we will discuss the requirements of an applicant to the Mortgage Rescue Scheme and which organizations you can contact to get free independent advice.

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