Homeowners Mortgage Support (HMS)

As the credit crunch hits and the jobs have dried up, you maybe struggling to meet your monthly mortgage payment. The government have introduced a scheme specifically for borrowers that are experiencing a “temporary income shock”. A temporary income shock can be anything that affects your household income, such as, redundancy or reduction in hours, loss of part time or a partner’s earnings, loss of benefit due to a child leaving school, or a grown up child unable to contribute board due to unemployment.

How does it work?

HMS involves changing your mortgage to interest only, and then reducing the payments for a specific period of time (up to two years). This reduction will be based on your financial situation and can be up to 70% of the monthly payment. This is not a payment holiday, and reduced payments do have to be repaid at the end of the scheme, which means that you will likely pay extra interest over the term of your mortgage.

Are you eligible?

• The scheme will only cover borrowers with a total mortgage of less than £400k, and less than 16k in savings.

• You must have been making regular payments (though not necessarily of the full amount due) over the five months before joining the scheme, unless you had agreed a payment holiday with your lender

Where do you go for help?

Speak to your lender: You can check to see if your Lender is participating in the HMS scheme at www.directgov.co.uk. If your lender is participating, they will also need you to meet certain eligibility rules before they make a decision and offer you the scheme.

Not all mortgage lenders are participating in this scheme; however, all lenders must try and offer help to borrowers before commencing any legal action for repossession of the property.  This is called forbearance, or pre action protocol, and may include reducing the mortgage to an interest only product, changing the payment date, or capitalising arrears.

What’s next?

CCCS will provide HMS advice, but please speak to your lender first who will refer you through a dedicated phone line.  If your lender is not participating, CCCS can provide you with general debt advice by contacting our free phone number on 0800 138 1111.

The most important thing to do is speak to your lender.  Even if you are not considering applying for HMS, or any of the other government rescue schemes, you must make contact as soon as you are unable to make a payment to your mortgage.