Mortgage Brokers Welcome Government help for vulnerable Borrowers

A major body, which represents mortgage brokers and other housing market specialists, has welcomed the government's proposed extension of a scheme which will help struggling families to pay their mortgages and avoid the threat of repossession.

The Association of Mortgage Intermediaries (AMI) said that the new broader help available to vulnerable people was a significant step in helping people who are at threat in the current economic climate.

Help for homeowners applauded
Income support for mortgage interest (ISMI) is available to homeowners, who already qualify for means-tested benefits and is worth around £40 a week to help them keep up with mortgage payments. Before the recent extension only those with mortgages worth up to £100,000 were eligible for the support but now this has doubled.

Under the new parameters, claimants will only have to wait 13 weeks to begin to claim as opposed to 39 weeks previously. The size of mortgage is now £200,000 up from £100,000 and even exceeds the forecasted rise of up to £175,000.

Robert Sinclair, director of AMI, said in a statement that:

“Government action to support homeowners in financial difficulties who may face the prospect of repossession is to be welcomed. This will provide support to a small but important group of people who are vulnerable following job losses, in the current economic climate.”

While being pleased at the actions of the government, Sinclair noted that those who are in danger of falling behind should be proactive when it comes to seeking professional help and to not let things spiral out of control.

“Homeowners should take action as soon as they think they may have trouble meeting mortgage repayments. They should either contact the lender direct or the mortgage intermediary they used to arrange the deal. Intermediaries can and do play a vital role in helping consumers to cope in difficult circumstances. Mortgage intermediaries will look at an individual’s circumstances and recommend the best course of action,” he added.

Going forward
The amount that you receive under the ISMI scheme is calculated assuming a mortgage interest of 6.08% regardless of the actual amount of each mortgage and the money is paid directly to the lender by the state. This extension is in addition to another recent government initiative, the "homeowner mortgage support scheme", which will guarantee the mortgage interest payments of those who have lost their jobs for two years.

“2009 is likely to be a tough year for consumers and homeowners in particular. It is right the government does all it can to support them. AMI will continue to work with government to ensure the best possible outcome for homeowners,” added Sinclair.

Work and Pensions Secretary, James Purnell, was upbeat about the scheme and told the press that:

“We have changed the rules to make sure even more people can get help with their mortgage payments if they lose their job. We have brought in changes as quickly as possible so people don't have to wait too long for this support.”