Mortgage Rescue

The Mortgage Rescue Scheme is designed to support vulnerable owner-occupiers facing repossession to remain in their home. Funding of £200m over the next four years is available through the HCA's Affordable Homes Programme to Registered Providers who will add their own resources (supported by rent or equity loan charges).

We now have over 150 partner providers working with the 22 lead providers to provide mortgage rescue across England.

The Mortgage Rescue Scheme comprises of two distinct options, shared equity, where the household remains as a homeowner and Mortgage to Rent, where the household becomes a tenant of the housing association.

Mortgage to Rent

The property is purchased by the housing association and let to the household on an Assured Short hold Tenancy with rent charged at 80% of market rent.

Shared equity

The household’s existing secured debt is reduced to an affordable level by an equity loan provided by the housing association. 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.

Guidance to providers of mortgage rescue can be found in the Capital Funding Guide or the Mortgage Rescue Toolkit.

Recent Changes

A number of changes to the operation of the Mortgage Rescue Scheme have been announced, following a review by the Housing Minister of the support in place to assist home owners threatened by repossession. The changes have been designed to ensure as many eligible households as possible can benefit from the scheme within the remaining budget. They are:

1. The grant rate has been revised to 47% for all referrals received after 28 February 2011. The home owners equity contribution to the rescue has also been revised to 10% of the current value of the home from the same date.

2. HCA approval must be sought to complete the purchase of any property over the regional property price cap. The upper limit will be 110% of the regional price cap at the discretion of the relevant HCA area team. This removes the discretion previously given to Registered Providers, and applies to all referrals received after 1 August 2010.

3. For all referrals received by Registered Providers after 1 August 2010, the cost of repairs to bring the property up to the Decent Homes standard can be up to a maximum of £20,000, and will be funded by the Agency on the same basis as the split of the grant rate with the provider. Registered Providers can fund repairs costs from their own resources at their discretion.

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. It has not been updated to reflect the recent changes to the scheme, but the document remains a useful source of information on delivering the programme.

Financial Appraisal Model - XLS (218KB)

Information on the application process is on the Directgov website.

Mortgage Rescue completions

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

• Mortage Rescue completions - April to September 2011 - csv (1KB)

The key highlights are as follows:

• A total of 820 households were able to remain in their own homes as part of the Mortgage Rescue programme
• The North West region accounted for the highest number of people benefiting from Mortgage Rescue, representing over a quarter of all Mortgage Rescue completions  in this period

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