Mortgage Rescue

The Mortgage Rescue Scheme is designed to support vulnerable owner-occupiers at risk of repossession to remain in their home.  Funding of almost £200m for 2011-15 is available through the HCA's Affordable Homes Programme to Registered Providers who will contribute their own resources (supported by rent or equity loan charges).

There are approximately 150 partner providers working with the 19 Mortgage Rescue Lead Providers to deliver Mortgage Rescue across England, excluding London (since 1 April 2012 Mortgage Rescue in London is delivered by the Greater London Authority)

The Mortgage Rescue Scheme comprises two distinct options – Mortgage to Rent where the household becomes a tenant of the provider; and Equity Loan where the household retains an element of ownership of their home.

Mortgage to Rent

The property is purchased by a Registered Provider and let to the household on, in most cases, an Assured Shorthold Tenancy with rent charged at up to 80% of market rent.  Since 1 April 2012 the range of Registered Providers able to take ownership of Mortgage Rescue properties has been expanded to include local authorities and Arms Length Management Organisations (ALMOs) that are Registered Providers.

Equity Loan

The household’s existing secured debt is reduced to an affordable level by an equity loan provided by the housing association which reduces the monthly mortgage payments.  The equity loan is secured as a second charge with an interest charge of 1.75% per annum.  This fee will rise by RPI + 0.5% per annum.

More detail on these Mortgage Rescue options can be found in the Capital Funding Guide or the Mortgage Rescue Toolkit.

Key elements of the Mortgage Rescue Scheme

The Mortgage Rescue Scheme has undergone a number of changes since its inception in 2009 to ensure as many households as possible are able to benefit.  The key elements of the scheme at present include the following:

1. The grant rate for the Mortgage to Rent product is 47%, with the homeowner’s contribution to the rescue being 10% of the current market value of the home.
2. HCA approval must be sought to complete the purchase of any property over the regional property price cap.  The HCA operates a flexible approach to reflect local house prices, the size of properties, the circumstances of the household and other factors.
3. A grant rate of 47% is available up to a maximum repair cost threshold of £20,000 to bring properties up to the Decent Homes Standard.  Registered Providers can fund repairs above this threshold from their own resources.
4. The Minister has agreed that the deadline for new applicants be extended to 31 March 2014, or earlier if the resources available are fully committed.

Mortgage Rescue Toolkit

The Mortgage Rescue Toolkit provides information on the scheme for organisations providing Mortgage Rescue to eligible households.  It contains detailed information on the two options available, and also a set of standard documents which can be used when processing applications.

More information on Mortgage Rescue and the application process is available on the GOV.UK website.

Mortgage Rescue completions

These figures provide a summary of the HCA’s Official Statistics for the period April 2011 to September 2012.  Information is provided on Mortgage Rescue completions by standard region and by HCA Operating Area.

• Mortgage Rescue completions - April 2011 to March 2012 and April 2012 to September 2012 - xls (24KB)

The key highlights are as follows:

• Since April 2011 a total of 1,736 households have been able to remain in their homes as part of the Mortgage Rescue Scheme
• The North West and South East regions have accounted for the highest number of households benefiting from the Mortgage Rescue Scheme over this period
• Since the scheme began in 2009/10 a total of 4,413 households have been helped to remain in their homes by the Mortgage Rescue Scheme

Prior to April 2011 DCLG provided monitoring statistics on a quarterly basis. These can be found at DCLG Mortgage Rescue Statistics to March 2011.

Assisting shared owners at risk of repossession

Shared owners are not eligible for assistance under the Mortgage Rescue Scheme, but may be able to get assistance where they are at risk of repossession through flexible tenure, which allows shared owners to reduce the size of their owned share.  Further advice is available in our publication Assisting shared owners at risk of repossession: Flexible tenure.  Applicants for flexible tenure should contact their landlords for further details.