BSA and UK Finance call for changes to mortgage support scheme

The government’s Mortgage Interest Support Loan program helps homeowners who receive benefits but must wait 39 weeks to apply.

But the bodies say that during this time “their financial situation can become so difficult that they cannot stay at home.”

The government’s leave program, which supported people who could not work from home during the pandemic, ends on October 1.

There are 1.6 million people on the Coronavirus Job Retention Scheme, or leave, according to HMRC data released last week.

The two financial services organizations are calling for two key changes to mortgage interest support to help homeowners.

They want the government to reduce the wait time people can ask for mortgage interest assistance from 39 weeks to 13 weeks, “to make sure the help is provided when people need it most.”

The agencies also say people with universal credit should be allowed to apply for mortgage interest assistance if they work reduced hours.

They add: “Mortgage interest support is a loan and not a benefit, which means that these changes will have a very limited impact on public funds, but will have a huge impact on the households that will benefit from them. “

Mortgage lenders have granted more than 2.9 million mortgage payment deferrals to help homeowners during the pandemic, according to associations.

But they add, while lenders will continue to support those who are still struggling, some homeowners will also benefit from mortgage interest support.

Building Societies Association Mortgage and Housing Policy Officer Paul Broadhead said: “With the leave scheme ending in just a few days, unemployment is likely to rise.

“Without urgent modification of the mortgage interest support regime, the risk of home repossession could become a reality for many despite the best efforts of lenders.

Without the reforms, we expect that more public funds will be needed to provide housing allowances to former landlords who could not get the financial support they needed, when they needed it. ”

UK Mortgage Finance Director Charles Roe adds: ‘The wait time and current eligibility criteria for mortgage interest support are preventing distressed homeowners from getting much-needed help before their mortgage arrears start. to accumulate.

As the leave scheme comes to an end, we may see more people needing to use the mortgage interest support.

UK Finance and BSA are calling on the government to urgently review the program’s eligibility criteria and reduce the current wait time to more than nine months.

Money Advice Trust’s Director of External Affairs and Partnerships, Jane Tully, said: With the holiday ending on October 1 and with many facing the risk of unemployment and reduced hours, access to support through universal credit and mortgage interest support will be crucial.

However, for homeowners who are struggling to make their mortgage payments, waiting 39 weeks for assistance from Support for Mortgage Interest risks the build-up of arrears and the potential repossession of the home.

Tully, who also runs the National Debtline charity, adds: “Mortgage borrowers caught off guard by the impact of Covid, need the government to act now by reducing the wait for mortgage interest support to 13 weeks and changing the income rules under universal credit to ensure that they can access the life support they need. . “

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