More support for struggling homeowners
Homeowners who struggle to pay their mortgages after losing their jobs will now only have to wait for 13 weeks before they can apply for state help.
From 5 January, the waiting period for support for mortgage interest (SMI) has been cut by two-thirds, from 39 weeks to 13. In addition, the scheme has now been widened to include people with mortgages of up to £200,000, double the previous upper limit.
James Purnell, work and pensions secretary, says: “We have changed the rules to make sure even more people can get help with their mortgage payments if they lose their job. We have brought in changes as quickly as possible so people don't have to wait too long for this support.”
The SMI scheme provides mortgage relief to people receiving means-tested benefit, including income-based jobseekers allowances.
Lenders are also being encouraged to do their bit to help struggling homeowners, especially those who have lost their jobs. So far, eight unnamed lenders have agreed to allow some borrowers to defer part of their interest payments for up to two years. Gordon Brown is backing the scheme by offering a government guarantee to cover any potential losses arising from deferred payments.
Robert Sinclair, director of the Association of Mortgage Intermediaries, welcomes the changes.
“This will provide support to a small but important group of people who are vulnerable following job losses, in the current economic climate," he adds. “Homeowners should take action as soon as they think they may have trouble meeting mortgage repayments. They should either contact the lender direct or the mortgage intermediary they used to arrange the deal."
Meanwhile, Brown has also proposed a new job creation scheme, which will see 100,000 new positions created in the public sector. The Prime Minister says this is part of a number of "anti-recession measures".
But both the Conservative and the Liberal Democrat Parties says Brown must reveal more details of the scheme, including how it will be financed.