Homeowners Mortgage Support

This content applies to England only.

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

The Homeowners Mortgage Support (HMS) scheme was a Government initiative designed to help homeowners who are struggling to meet their mortgage payments because of a temporary drop in income. The scheme was closed to new applicants from 21st April 2011.

As an expert in housing advice, Shelter was asked by the Government to advise people with mortgage arrears who needed to consider this option. Information on this scheme remains here for the benefit of previous applicants.

How does Homeowners Mortgage Support work?

Homeowners Mortgage Support was designed to help people who are having trouble keeping up with their repayments because their household income had fallen temporarily.

Shared ownership or shared equity properties were included in the scheme.

If you qualified for Homeowners Mortgage Support, the scheme allows you to delay paying part of the interest on your loans for up to two years. The interest that you do not pay while you are on the scheme is added onto your outstanding mortgage. The interest you defer is not written off – you will have to repay it eventually. Payments can be deferred for a maximum of two years, although your situation will be reviewed after the first year.

You can visit the Directgov website for more information and also download the Government’s consumer guide.

Is it still a good option for me?

Homeowners Mortgage Support was designed to help people in short-term difficulties - for example, if your overtime had been cut, your hours reduced, or your household was having to rely on one income instead of two.

It is particularly important to remember the following points:

Homeowners Mortgage Support is not a payment holiday – your monthly payments are reduced, but not stopped.
Your debt will be increasing while you are on the scheme.
Afterwards, you will need to extend your mortgage term or make higher repayments than you currently pay, to pay off the debt you have put off.
It is only a short-term solution, while you get your finances back on track. You must be confident that your financial situation is going to improve over the next couple of years.
If your circumstances change, HMS may no longer be the best option for you. For example, if you lose your job and can no longer keep up with the smaller repayments, another Government scheme (such as mortgage rescue) may be more suitable.
The scheme reduces the risk of repossession, but does not eliminate it. Your home will still be at risk if you don’t keep up with the reduced payments, or if you cannot afford the higher payments when you leave the scheme.

Who was eligible?

Homeowners Mortgage Support was aimed at households who have experienced a significant but temporary loss of income – for example due to redundancy, compulsory reduced hours, a reduction of in the availability of overtime, or caring responsibilities.

Those eligible had to have switched to an interest-only mortgage. You must also be able to show that your household’s income has dropped substantially (but temporarily) and that you cannot meet the current monthly payments on your mortgage. You must agree to pay as much as you can afford and at least 30% of the interest due. You and your lender will decide together how much you can afford, with help from your money adviser.

Lenders also usually say that:

your mortgage and any other loans secured against your home must not be more than a certain amount
your savings must be below a certain level
you must have taken out a mortgage or remortgaged before a certain date, and
you must have been making regular repayments (though not necessarily of the full amount due) over the five months before joining the scheme, unless you had agreed a payment holiday with your lender

Even if you met these criteria, you will not be eligible for the scheme if:

your income is unlikely to return to its previous level – for example if your loss of income has been caused by a long-term illness (in this situation, other options may be more appropriate so you should get advice)
your lender is not offering Homeowner Mortgage Support (see below)
you have mortgage payment protection insurance (MPPI) that will cover your situation
you are not working and are claiming jobseeker’s allowance, income support or employment and support allowance, so you may be able to claim support for mortgage interest (SMI) instead
other assistance that you may be eligible for would be more suitable – this might include Government mortgage rescue
you own more than one property (eg a buy-to-let investment).
there are more suitable options available.

Will my situation be reviewed after I join the scheme?

Your financial circumstances must be reviewed again by your lender(s) and an accredited adviser after one year. The date for this review will be specified in the lender decision letter. It may be up to one year from the time you join the scheme. You will need to provide accurate and up-to-date information about your finances again at this stage.

What if my circumstances change?

You must inform your lender(s) of any change in your financial circumstances – whether positive or negative – as soon as you possibly can. The lender will consider whether you are still eligible for Homeowners Mortgage Support.

You’ll need to tell your lender if your financial situation changes. If you start to earn more, you must pay more back. Remember, the interest you don't pay during the deferral period will be added to your outstanding mortgage, and will need to be repaid eventually. You can return to normal payments at any time.

If your household’s circumstances worsen, you should get advice immediately. You may have to consider other options.