New measures to help if you have mortgage arrears
This content applies to Scotland only.
Housing laws vary between Scotland and England. This page applies to Scotland only. Get advice relating to England
Several new measures have been announced to help people who are struggling to pay their mortgages. This page looks at how these measures affect borrowers in Scotland.
Homeowners Mortgage Support
Under a new scheme, borrowers who are struggling to meet their mortgage payments will be able to defer part of the interest on their loans for up to two years, to give them time to get back on their feet. This scheme will only be available to borrowers who:
- have a mortgage of up to £400,000, and
- are only experiencing temporary financial difficulties, and
- aren't benefiting from any other schemes, and
- have less than £16,000 in savings.
The scheme was launched on 6 April 2009. The page on homeowners mortgage support (HMS) has more information.
Six month delay on repossession
Some banks, including Royal Bank of Scotland, NatWest, Bradford and Bingley and Northern Rock, have agreed to delay taking repossession action for six months, to give borrowers time to sort out their arrears.
However, if you know that your financial situation is not going to improve and you will no longer be able to afford your mortgage in the future, you may be better off selling your home earlier, rather than delaying and building up more arrears. Talk to a debt adviser if you're in this situation, as they should be able to help you work out the best course of action.
Actions lenders should take before repossession
In England, lenders are expected to take certain steps when borrowers fall into mortgage arrears, and only use repossession as a last resource. When the English courts are deciding whether or not a borrower's home should be repossessed, they must consider whether or not the lender has taken these steps.
Although these rules don't apply in Scotland, lenders with customers in England and Scotland may decide to follow these steps regardless of where their customers live.
If so, this means that your lender should:
- provide you with information about the total amount of arrears, the outstanding balance on the mortgage, and details of any interest or charges that may be payable
- take steps to discuss the reason you're in arrears whether the situation is temporary or long term, and what your financial situation is
- advise you to contact your local council, for advice
- consider reasonable requests to vary the regular date of payment or method of payment
- discuss proposals for repayments of the arrears, give reasons in writing within 10 days if your proposals are not accepted, and allow you reasonable time to consider any proposal they make to you
- give you 15 working days notice writing of their intention to issue a claim for possession, if you don't keep any agreement you make with your lender.
Mortgage to rent and mortgage to shared equity
The Scottish Government also announced the introduction of a new Home Owners Support Fund, which aims to improve the mortgage to rent scheme and launch a new mortgage to shared equity scheme, these changes came into effect on 16 March 2009.
In addition, the limit for financial assistance for civil legal aid has been raised substantially, meaning most people in Scotland will now qualify for assistance.
