In the Budget, Alistair Darling extended the Income Support for Mortgage Interest (ISMI) scheme for a further six months allowing people recently unemployed to claim state benefits to help pay interest on their mortgage. The Homeowners Mortgage Support (HMS) scheme was also launched this week as part of the Budget, enabling householders experiencing a significant and temporary loss of income to defer a proportion of mortgage interest for up to two years.
Debt management specialists Baines & Ernst, part of the Paymex Group, claim the schemes offer householders struggling to make mortgage repayments little support. Nick Pearson, the company’s director of external affairs explained: “Offering financial support to cover mortgage interest or deferring interest until a later date will do little to assist most homeowners who have a mortgage. It’ll prove a drop in the ocean and will only assist a small minority of those in arrears and facing potential repossession. Many secured loans will not be covered by mortgage interest assistance as they do not fall within the legislation covering interest assistance.
“Furthermore, just six mortgage lenders have signed-up to the HMS, including four that are backed by the Government, suggesting little industry support for the scheme and few assurances for borrowers.
“People experiencing financial difficultly need holistic support that addresses typical debts spanning loans, credit cards and other unsecured borrowings such as store cards and vehicle finance. Without this, repossessions will continue to rise this year and in 2010.”
