Mortgage Rescue Schemes

October 25th, 2007 | mortgages-

Mortgage rescue is when a firm or the government step into prevent your home being repossesed. It involves selling your home to the firm. They then rent it back to you.

Quite often a mortgage rescue firm will pay less than the market value for the house. However, the new rent will probably be less than your existing mortgage payments

Council Mortgage Rescue Schemes.

In these schemes your local authority will buy your house and pay off your mortgage. They will then rent it to you; usually there is the option to buy back the house later. To qualify for a mortgage rescue scheme, it is necessary to be able to show you are struggling with mortgage repayments. For example, if you had a temporary fall in income, – due to perhaps an unexpected illness.

As mortgage rescue schemes are quite expensive, the council may prefer to simply move you to another area or offer existing council housing. It depends on

Should I take out a Mortgage Rescue Scheme?

Before you take out a mortgage rescue scheme you should consider the following.

1. Have you tried all options of remortgaging to a cheaper deal? For example, temporarily switching to an interest only mortgages.

2. Have you spoken to your existing mortgage lender about a possible payment holiday

3. Have you considered selling and moving to a cheaper area?

4. Is the mortgage rescue company regulated by the FSA?

5. Before taking out a mortgage rescue package it is worth speaking to an independent financial adviser. It is a big step and it may be more difficult to buy it back than you imagine.

6. Avoid defaulting on mortgage payments until the deal is completed, this protects your credit record.

7. Mortgage rescue schemes can be useful in some circumstances, but, they should be seen as an option of last resort.