Government mortgage rescue scheme
This content applies to England only.
Housing laws vary between England and Scotland. This page applies to England only. Get advice relating to Scotland
The mortgage rescue scheme (MRS) is a Government initiative that aims to provide a safety net to up to 6,000 vulnerable households at risk of losing their homes through repossession. This scheme is available throughout the UK.
The Government’s mortgage rescue scheme is very different to sale-and-lease-back schemes operated by private, profit making companies.
How does the mortgage rescue scheme work?
The scheme is set up to work in two different ways:
- Some households will get a shared equity loan.
- Others will be offered help from a ‘mortgage to rent’ scheme, whereby a local housing association buys their property and rents it back to them.
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 payments easier to manage.
Mortgage to rent
With this option, the housing association will buy your property at close to the market value (97 percent) and allow you to continue living there at a reduced rent (20 percent 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?
You may be eligible for the 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, or
- are considered to be vulnerable for other special reasons.
In order for your application to be considered 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 until you have done this.
You will not be entitled to help if:
- you have a second home, or
- your household has an annual gross income above £60,000
- the total amount you owe on your mortgage and any other secured loans is less 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.
How do I apply?
If you are considering this option, you can contact Shelter's homeowner helpline on 0300 3300 515 for an initial assessment. We can help you make an application to your local council.
Alternatively, use our directory to find face-to-face housing advice services in your area, or contact your local council directly - you can find their details on the Directgov website.
