£20 million 'safety net' to help prevent mortgage repossessions

By Joel Stanier

Struggling homeowners who can't keep up with their mortgage payments could benefit from a new £20 million fund from the Government to help them keep their home.

The 'Preventing Repossessions Fund', announced yesterday by Housing Minister Grant Shapps, enables councils to offer small interest-free loans of up to £5,000 to homeowners at risk of being repossessed. Small grants will also be made available.

£1 million from the fund is being given to County Courts to ensure that homeowners receive free on-the-day legal advice.

Repossession only usually occurs when homeowners fall several months behind on their mortgage payments with no realistic chance of recovery, or because they have unpaid debts that are secured against their mortgage.

Mr Shapps commented: "Repossession should only ever be the last resort. No one in financial difficulty should be embarrassed to seek help if they need it. [The Preventing Repossessions Fund] ensures that no matter where you are in the country, the advice and the financial support is on hand to help people get on top of their finances and keep them in their hard earned homes.

"Getting advice early is important - but even for people facing a court hearing, repossession is not a foregone conclusion. By extending the reach of the Court Desk scheme we are ensuring that no one is left stranded without the support of the free on-the-day legal advice that has already saved thousands of families from repossession."

Recent figures from the Council of Mortgage Lenders (CML) showed that the number of repossessions was lower than forecast - 36,200 as opposed to the predicted 40,000 - and it was the lowest figure since 2007.

However, many experts have noted that repossessions may be falling due to the unusually low interest rates currently available on mortgages - and when rates begin to rise, more homeowners could begin to struggle.

Tags: mortgage, Repossessions, debt, Council of Mortgage Lenders, CML

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