Certus Mortgage: Mortgage Support scheme up and running

The Government’s Homeowner Mortgage Support Scheme – an initiative which allows households at risk of repossession to defer up to 70% of the interest on their monthly mortgage payments for up to two years – has gone live from today, though some major lenders have opted to offer their own alternative.

The initiative was given the required green light by Brussels under EU state aid rules on Monday. It is open to borrowers who bought their home before 1 December 2008, are owner-occupiers, and have an outstanding mortgage of less than £400,000 and savings of less than £16,000. Lenders offering the scheme will have the security of a Government guarantee if the borrower defaults.

From today, the following major high street lenders will offer their customers the mortgage support: Lloyds Bank Group, Northern Rock, the Royal Bank of Scotland, Bradford and Bingley, Cumberland Building Society, and the National Australia Bank Group.

Specialist lenders and building societies, including Kensington and GMAC have also signed up, though Barclays, HSBC, Nationwide and Santander have all confirmed they will offer comparable arrangements to their customers, while opting not to take up the Government guarantee.

Michael Coogan, director general of the Council of Mortgage Lenders, commented: "Lenders are working strenuously to keep borrowers in their homes where they have a good prospect of being able to get back on track and sustain their home-ownership in the long term. The government is helping, through changes to Income Support for Mortgage Interest, the mortgage rescue scheme, and now the home-owner mortgage support scheme.

"Lenders fully recognise their responsibility to keep people in their homes where repossession can be avoided. The fact that some lenders are utilising the new scheme and others are not indicates simply a difference in their approach to forbearance, not in their commitment to it."