The Homes and Communities Agency has now announced the details of the Mortgage Rescue Scheme for all new applications after 1 April 2011. The new product has been given £200 million of funding and is due to last two years with the intention that 2,500 households will be rescued.
There are no changes to the Shared Equity product, however there are changes to the Government's Mortgage to Rent product which it is hoped will provide better value for money and ensure more households can be helped. The main changes are:
- the grant rate payable to providers will be reduced to 47% from 55%;
- the redemption price paid to applications for the property will be reduced to 90% from 97%; and
- the HCA will now be setting budgets for each provider for the different areas they work in through negotiations with the provider and between local authorities.
Please click here to read the full briefing note from the HCA.
How the lenders will take to the reduction in the redemption figure paid will soon become clear although the revised scheme does have the agreement of the Council of Mortgage Lenders and the Government will be working closely with all parties to monitor the changes.
We also await confirmation on how the reduced redemption figure may affect the issues of bankruptcy and sales at an undervalue and will advise once we have further information.