Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Britons could lose their homes when mortgage holiday ends

mortgage

A report from the Centre for Policy Studies warned that large numbers of households will not be able to afford their mortgage repayments this winter

Many people could face losing both their job and their home this winter unless the government takes urgent action to reform benefits for homeowners, a think tank has warned.

With mass redundancies predicted as the furlough scheme ends next month, further support is needed to prevent people who become jobless losing the roof over their head, according to a report from the Centre for Policy Studies.

It warned that, even with the new Job Support Scheme, large numbers of households will not be able to afford their mortgage repayments if their wages are reduced or they lose their job.

Borrowers have been able to take a mortgage repayment holiday from April but that is set to come to an end next month potentially leaving many households vulnerable just as unemployment is forecast to surge.

The CPS’ report, supported by the Joseph Rowntree Foundation, points out that while tenants can apply for housing benefit to cover housing costs, homeowners cannot get help with mortgage repayments.

They can only get help with the interest payments on their mortgage and they must wait nine months to qualify. If they take any work at all, the whole amount is withdrawn.

To combat this problem, the report calls for urgent changes to the existing Support for Mortgage Interest (SMI) benefit to support low-income homeowners through the pandemic.

The reformed scheme would offer homeowners a grant to cover mortgage payments for the three first three months and a loan in subsequent months.

The nine-month wait for support would be abolished and lenders would be obliged to make people who are at risk of losing their homes aware of this scheme automatically.

To ensure that people do not remain in homes they cannot afford in the long term, the report recommends that SMI should be time-limited for claimants who are able to work and are not receiving a disability-related benefit.

James Heywood, head of welfare and opportunities, at the CPS said: The Support for Mortgage Interest Scheme is going to be vital for ensuring people losing their jobs do not also lose their homes before they manage to get back to work. The Government needs to act now to make the necessary changes so people can move straight onto SMI when their mortgage holiday runs out or when they become unemployed.

He said, if they don’t, not only will people be forced out of home ownership into the rented sector, it will also cost the state more to support them through housing benefit.

Darren Baxter, policy manager at the Joseph Rowntree Foundation, said: Even before coronavirus hit, a third of homeowners were living in poverty. And as the economic fallout from the pandemic grows, that number is likely to rise. With the deadline for applying for a mortgage holiday rapidly approaching, now is the time for government to take swift action.

Baxter said, even before coronavirus hit, a third of homeowners were living in poverty. And as the economic fallout from the pandemic grows, that number is likely to rise. With the deadline for applying for a mortgage holiday rapidly approaching, now is the time for government to take swift action.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.