Mortgage rescue schemes

Some local authorities and housing associations operate mortgage rescue schemes (MRS) to help homeowners avoid mortgage repossession if it is likely that otherwise the homeowner will be homeless.

These schemes are very different to sale and rent back schemes operated by private, profit making companies.

How do mortgage rescue schemes work?

Schemes are set up to work in two different ways:

  • Some households will get a shared equity loan.
  • Others will be offered help from a ‘mortgage to rent’ scheme, whereby a local housing association buys their property and rents it back to them.

Shared equity loan
To be eligible for a shared equity loan, you will need to have some equity in your property. If you qualify, you will be given an equity loan from a housing association which should enable you to keep up with your mortgage payments. The loan is repayable to the housing association but is interest free.

Mortgage to rent
If you cannot afford to continue owning a share of the property, the housing association may decide to buy the property at close to market value, and rent it back to you.

You would no longer own your own home and in most cases you would be given an assured or an assured shorthold tenancy.

Who is eligible?
In March 2011, the Welsh Government passed responsibility for the operation of MRS directly onto local authorities. Not all local authorities have decided to operate MRS and you will need to contact your local authority housing department directly to see if they operate a scheme and, if so, what criteria you have to meet to be eligible. If you prefer you can contact Shelter Cymru who will be able to tell you if there is a scheme running in your area.

Some housing associations in Wales also operate their own MRS, and again you should contact them directly to see if they can help you, or contact Shelter Cymru for more information.

Funding for most schemes is limited, so not everyone who applies will accepted. Some of the things the local authority or housing association is likely to consider when deciding if you can get help through the MRS are whether:

  • you live in specially adapted housing to meet the disability needs of your household
  • you would be in priority need for re-housing by the council if you become homeless
  • your lender intends to repossess your home
  • you will be homeless if the property is repossessed
  • the property is your only or main residence
  • the property is clear of any legal reasons that would prevent it being sold
  • you are unable to sell the property and buy a cheaper home locally.

Who can help you apply?

Shelter Cymru’s housing advisers can explain the schemes and help you work out if you might be eligible. We also have specialist debt advisers if you need more in depth debt advice. Or you can contact the citizens advice bureau.

You can also contact your local council’s Housing Options team, homelessness team or housing strategy officers for advice as to whether there is an MRS in your area which could help you.

We are sorry that we cannot provide this information in Welsh, however if you would like to speak to an adviser in Welsh please contact 0345 075 5005.

Page last updated: Sep 15, 2017 @ 10:47 am

This page was last updated on: September 15, 2017

Shelter Cymru acknowledges the support of Shelter in allowing us to adapt their content. The information contained on this site is updated and maintained by Shelter Cymru and only gives general guidance on the law in Wales. It should not be regarded or relied upon as a complete or authoritative statement of the law.