Unemployed need more help with mortgage repayments
7 May, 2008 | Insurance | adminThe government is being urged by mortgage lenders to provide unemployed homeowners with greater assistance when it comes to making their mortgage repayments. Banking officials state that many homeowners become at risk of missing repayments and losing their homes when they are out of work for short periods of time, and that increased intervention by the government to help out in situations such as these could help many of these people to avoid having their homes repossessed through defaulting on their secured loans.
At present there are limits in place, including a nine month waiting time and a £100,000 limit. However, However, the homeless charity Shelter and the Council of Mortgage Lenders want to see the waiting time reduced and the £100,000 limit raised. Officials from the Department for Work and Pensions has stated that this is a matter than is regularly reviewed by the government. The current restrictions that are in place came into play in 1995, due to soaring costs associated with helping those out of work to pay their mortgage interest.
The Council of Mortgage Lenders now wants to see these restrictions relaxed, with one official stating: “The state support scheme was reduced in 1995 in the hope that private insurance would provide mortgage protection instead. What we’ve seen is, that hasn’t happened.” The CML is calling for a cut in the nine month waiting time, stating that by this time the lenders would have put repossession proceedings into place so any help would come as too little too late.
The CML also wants the cap on the maximum amount raised, stating: “If it had been linked to house price inflation it would be £300,000.” It added: “I don’t think it would put up costs hugely. It is short-term relief for those people getting back on their feet. In an environment of low inflation, low interest rates and high employment this bridges the gap for a few months for people who lose their job and look for another one.”
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