Government mortgage rescue scheme

This content applies to England only.

Housing laws vary between England and Scotland. Get advice relating to Scotland

The mortgage rescue scheme is a Government initiative that aims to help homeowners in danger of losing their homes. The mortgage rescue scheme is available throughout the UK.

How does the mortgage rescue scheme work?

The Government’s mortgage rescue scheme is very different to sale-and-lease-back schemes operated by private, profit making companies.

The mortgage rescue scheme is set up to work in two different ways:

Some households will get a loan that is called a ‘shared equity loan’.
Others will be offered help from a ‘mortgage to rent’ scheme, where a local housing association buys their property and rents it back to them.

With both solutions, you will be offered ongoing advice to help you manage your finances.

Shared equity loan

To be eligible for a shared equity loan, you will need at least 25 per cent equity in the property.

If you qualify, you will be given an equity loan from a housing association. You will have to pay an interest-only monthly repayment on the equity loan, which should make your total monthly mortgage payments easier to manage.

Mortgage to rent

With this mortgage rescue option, the housing association will buy your property at close to the market value (97 per cent) and allow you to continue living there at a reduced rent (20 per cent less than the market value). You would no longer own your home - in most cases you would become an assured shorthold tenant of the housing association.

Who is eligible for the mortgage rescue scheme?

You may be eligible for the mortgage rescue scheme if someone in your household is in priority need. This will be the case if, for example, you:

have a dependent child
are pregnant
are elderly
are disabled
are considered to be vulnerable for other special reasons.

For your application to be considered for the mortgage rescue scheme, you must also have taken steps to tackle your mortgage arrears. This includes:

working through all the possible options with your lender, and
having a financial statement prepared by a specialist debt adviser. Many Shelter advice centres offer specialist debt advice, as do Citizens Advice. Use our directory to find an adviser in your area who can help you.

The council cannot consider your application for the mortgage rescue scheme until you have done this.

You will not be entitled to help if:

you have a second home
your household has an annual gross income above £60,000
the total amount you owe on your mortgage and any other secured loans is more than 120 per cent of the value of your home
the value of your home is higher than certain levels set for each region – ask your council about the level for your area.

Applying for the mortgage rescue scheme

If you are considering the mortgage rescue scheme, you can contact a Shelter advice service in your area. We can help you make an application to your local council. If there is no Shelter service near you, you can contact another advice agency such as a Citizen's Advice Bureau, or contact your local council's housing department.

Use our directory to find Shelter and other face-to-face housing advice services in your area, or to find details of your local council.