Homeowners in Wales who are at serious risk of losing their home are to be offered a financial lifeline by the Welsh government and Plaid Cymru.
As part of a new scheme they could receive low-cost equity loans to help them make a partial repayment to an existing mortgage balance.
The support is being rolled out as part of the Help to Stay Wales Scheme, which will work along side the support offered as part of the UK Mortgage Charter.
It is also an extension to Mortgage Rescue, which has operated in Wales since 2008 and is for people who are in possession proceedings. The new scheme will extend this to support those who are facing possession and/or financial hardship.
In the Help to Stay scheme, a low-cost loan will be secured by a second charge – which is a loan secured against the home.
It will reduce revised mortgage repayments to a level the applicant can afford.
The Scheme will be operated by the Development Bank of Wales and will be interest-free for the first five years.
Julie James, Minister for Climate Change, said: “The aim of the Help to Stay Wales Scheme is to help homeowners to continue living in their precious homes.
“By widening our current mortgage rescue offer, we have the opportunity to help more people at an earlier stage before they face the awful threat of repossession.”
Ruth Power, chief executive for Shelter Cymru, said: “This scheme will offer eligible households assistance from the early point of arrears accruing, rather than waiting until they face the incredible stress of repossession.
“We must now ensure that as many households as possible have the option to use it to stay in their homes, learning from people at risk of homelessness how best such a scheme can help them.
“Anyone at immediate risk of losing their home can contact Shelter Cymru’s helpline on 08000 495 495 for independent advice.”
Whilst it aims to reduce the number of homeowners at risk of repossession and homelessness by offering them time to resolve their underlying financial issues, there have been some concerns about the scheme with mortgage advisers warning it may create problems further in the future.
Katy Eatenton, mortgage and protection specialist at Lifetime Wealth Management, said: “It is encouraging to see the Welsh Government trying to find ways to help troubled borrowers. However, this scheme is only pushing the problem further down the line.
“There is no guarantee what the repayments will be in five years or the amount that you will owe.
“With a conventional mortgage, you reduce the debt over time but with this option you are potentially increasing the debt over time.”
Find out more about the scheme here.
