The Council of Mortgage Lenders (CML) has called for the Government to encourage more wide-spread use of ‘mortgage rescue’ schemes to help those home-owners faced with the risk of repossession.

A ‘mortgage rescue’ scheme is a way of alleviating the pressure on those borrowers who are unable to meet their mortgage payments. A home-owner would be ‘rescued’ by a housing association or social landlord who would buy into a share of their property. The owner would therefore pay less on their mortgage albeit with a rental payment to the landlord. When their financial situation improves they will be able to repurchase the remainder of their property.

‘Mortgage rescue’ can also work when a home-owner is bought out of their mortgage by a housing association but remains as a tenant in their home. This is similar to the practice of sale and leaseback which is offered by private companies and landlords but offers the owner less security.

The CML said that there needs to be a standardised approach to ‘mortgage rescue’ schemes. In England only a few housing associations and local authorities offer support, while in Scotland, Wales and Northern Ireland each of the Governments are developing their own systems.

Bernard Clarke, spokesman for the CML, told PIN: “Mortgage rescue in the UK is currently piecemeal, so we’d like to see it available more consistently. It won’t be right for everyone, so borrowers’ circumstances, including the workability of any new arrangements, need to be assessed on an individual basis. Generally, we favour options enabling owners either to sell an equity share, with the flexibility to buy it back if their circumstances change, or to sell outright and become a tenant.”