The financial crisis of 2008 saw the Government put certain safety nets in place to help homeowners who struggle to make their mortgage repayments. Unfortunately, a report by UK Finance published today has revealed that most of this support is being withdrawn.
One of the key upcoming changes will hit in April 2018, when the current Support for Mortgage Interest scheme – which helps people who are struggling by paying the interest on their mortgage payments on their behalf – turns into Loans for Mortgage Interest. After that, any support given through this scheme will need to be repaid when the house is sold or transferred to a new owner.
Another important change, which won't be implemented until 2022, is that help will be limited to those who do not work, and then only in the form of loans, with even those in part-time or low-paid work having to rely on the support of their lender. This will likely put increased pressure on those already struggling to keep their head above water.
In response to the new findings, June Deasy, UK Finance's head of mortgage policy, said: "As this research highlights, there have been significant changes in the benefit system affecting homeowners. It is important that they are aware of these changes and how they may be affected."
There may still be some hope, though, as part of the reason why the Government is reducing its support is because lenders have increased regulatory duties to help their borrowers avoid financial upheaval.
"Lenders have responsibilities to help manage the consequences of diminishing support for homeowners in difficulty," said June Deasy. "They will always work with borrowers to help them manage a period of temporary difficulty, and avoid possession wherever possible. [That's why] borrowers are encouraged to talk to their lender at the earliest opportunity if they experience financial difficulty."
If you're in some financial difficulty, and your lender has done all that they can do to help, you could consider talking to a debt charity such as Citizens Advice to see if they can help you manage your finances, so that you won't have to lose your home.
As always, however, prevention is better than a cure. So, if you're on your provider's Standard Variable Rate, remember that even though these rates may not have risen as much as they could have recently, they are still much higher than the rates on offer on fixed rate mortgage deals. The best way to make sure you can keep making your repayments is by remortgaging to the lowest rate you can get.
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