The Homeowner Mortgage Support Scheme will only apply to owner-occupiers and not to buy-to-let landlords, the Government confirmed as it revealed further details of the initiative.
The scheme - whereby borrowers can defer payments for up to two years should they lose their job as a result of the credit crunch - has the support of eight major lenders.
In order to qualify, borrowers must have been in dialogue with their lender, including over the use of existing forbearance policies, and have taken out a mortgage no larger than £400,000.
Borrowers also must have savings below £16,000 - which is the same as for the existing Support for Mortgage Interest Scheme (SMI) - and must have received financial advice from a party other than their lender to determine their eligibility. This will include testing the long-term sustainability of their financial position, and their ability to resume full payments once their income increases.
The scheme itself will be open for a window of two years, subject to review. The Government's guarantee of the payments will last for a maximum time period and will expire once the customer is able to commence normal payments.
If, during the period of guarantee, the customer defaults, the Government will pay the lender the equivalent sum of the total amount of the interest guaranteed that is not recoverable from equity in the property.Mortgage Solutions
First mentioned in Cridland Report
Second acquisition of 2019
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