Mortgage rescue scheme rolled out

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The £200 million scheme allows vulnerable households to reduce their monthly mortgage payments by selling a share in their home to a housing association, or to sell the property to the association outright and remain in it as tenants on subsidised rents.

First announced as part of a package of help for homeowners in September, the scheme has already been taken up by 80 councils and has now been expanded to all local authority areas in England.

Housing minister Margaret Beckett said: "For the most vulnerable households, the mortgage rescue scheme will be available across England to help ensure they can remain in their homes.

"This is part of a range of measures the Government is putting in place to help households at risk of repossession in the current climate. As well as expanding free debt and legal advice, we have increased the support available for people who lose their jobs, and are introducing the option for homeowners to defer part of the loan to give them the time they need to get back on their feet."

The mortgage rescue scheme is targeted at households with incomes of less than £60,000 a year who would be entitled to be re-housed under homelessness legislation because they are are elderly, disabled or have children.

The Department for Communities and Local Government predicted that it will help up to 6,000 households avoid repossession over the next two years.

The Council of Mortgage Lenders (CML) has previously predicted that 75,000 homeowners will be repossessed in 2009. About 200,000 people are at least three months behind on mortgage repayments.

The mortgage rescue scheme forms part of a wider package of help for home-owners hit by the current economic downturn.

Last week, the waiting period before homeowners who lose their jobs qualify for state help with mortgage interest payments was cut from 39 weeks to 13. And ministers are working with lenders on a Homeowner Mortgage Support Scheme, which will allow households who suffer a sudden drop in income to defer part of their payments for up to two years.