Problems with mortgage interest help from Government
October 10, 2008
According to a recent report many officials have pointed out that there are some serious flaws in the scheme that the government has in place to help people with their mortgage interest payments if they lose their jobs. In the event of job loss the scheme means that the government will cover mortgage interest payments on home loans of up to £100,000. However, from April of next year this will apply to home loans of up to £175,000.
However, whilst the scheme can provide valuable assistance to some people officials have pointed out that there are some issues with the scheme. One of the major issues highlighted is that the help will not extend to people over the age of sixty, and one industry official said that the scheme was targeted at people of working age who were in the greatest need. The current limit of £100,000 was set in 1995, and at this stage the average house prices was just over £60,000.
Although the limit is being increased to £175,000 one Citizen’s Advice Bureau official said the increase should have been higher.
He said: “That will help people as it will mean the amount you have to make up yourself is less. In the 1990s £100,000 was quite a large house.”
An official from the Department for Work and Pensions said: “The reform to support for mortgage interest is designed to provide the most assistance to those who have taken out relatively large mortgages and are most vulnerable to future changes in the labour market.”
At present the waiting time for mortgage interest to be paid is around thirty nine weeks, but this is set to be cut to thirteen weeks.
One industry professional welcomed the cut in waiting times, stating: “By the time you get help from the benefit system it is quite likely that your lender has gone to court and you are being shuffled out the door. The reduction to 13 weeks should make it more possible for lenders to wear that amount of arrears and that should help people stay in their homes.”
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