New scheme for homeowners

21 April 2009

Terraced house

Homeowner Mortgage Support (HMS), which helps homeowners to stay in their homes through financial difficulty, has been launched. Shelter has greeted the scheme as a significant step forward.

HMS will enable eligible borrowers who suffer a temporary loss of income to cut their mortgage interest payments for up to two years, helping them get back on track with their finances.

HMS does not provide consumers with a payment holiday. The mortgage interest payments that have been deferred will eventually have to be paid back.

Before they join the scheme, borrowers will have to receive independent money advice to ensure they make the right decisions for their circumstances. Shelter is one of the providers of independent advice for the scheme. Find out more here

From today, major high street lenders covering more than 80 per cent of the mortgage market will offer their customers HMS. A number of other banks, building societies and specialist lenders have also confirmed that they will offer their customers HMS as soon as possible.

Lenders offering HMS will have the security of a Government guarantee if the borrower defaults.

At the same time, four other high street lenders have confirmed today they will offer comparable arrangements to HMS to their customers, while opting not to take up the Government guarantee.

Adam Sampson, chief executive of Shelter said:

'With half a million households expected to be more than three months in arrears this year, the launch of HMS today is a significant step forward because it genuinely has the potential to help tens of thousands of struggling homeowners.

'The fact that most lenders have now committed themselves to improving the protection offered to homeowners in trouble is great news. However, the lenders who have decided to operate their own schemes urgently need to make the details explicit. With thousands of worried homeowners coming to Shelter for advice we need to provide the most up-to-date and accurate information to them help them keep a roof over their head.

'The only way to prevent 75,000 repossessions this year is if all lenders are prepared to offer this kind of protection to struggling homeowners. We are calling on the remaining 20 per cent of lenders yet to sign up to the scheme to do so immediately or announce details of their own equivalent scheme.'

Shelter would urge anyone struggling with their mortgage payments to contact their lender now to discuss their options. Find out more here