The criteria for the government's scheme to help people who are struggling to pay their mortgage have been unveiled.
The government has announced criteria that homeowners must fit in order to benefit from its recently-announced Homeowner Mortgage Support Scheme.
Announced by the prime minister Gordon Brown last week, the scheme is one of a series of initiatives aimed at helping people during the upcoming recession. Various reports have suggested that repossessions will rise next year as people struggle with mortgage payments, which prompted the government to action.
"The new scheme will provide a bridge, giving homeowners who are experiencing financial problems sufficient time to find new employment or recover income, without the added concern and stress of potentially losing their home in the interim," the Treasury said in a statement. It added that the country's eight biggest lenders have agreed "in principle" to the plan.
To qualify, people must have "suffered a loss of income... of a scale which now makes full mortgage payments difficult", but this loss must not be expected to be permanent. Additionally, the scheme will only apply to owner-occupiers with savings of less than £16,000 and a mortgage of up to £400,000.
If homeowners do satisfy the criteria, they will be able to defer payments which will be "rolled up" and paid when their situation improves. The government will cover a proportion of the lender's loss if a customer defaults.
While the scheme will run for two years, guarantees will last "for a maximum time period", only finishing when the customer can begin paying normally again.
