Tuesday, April 21, 2009

More useless measures.Role up your interest payments? Financial suicide!

Mortgage support scheme underway

A scheme to keep some mortgage borrowers in their homes if they fall on hard times has begun. The Homeowners Mortgage Support Scheme (HMSS) will allow borrowers to defer up to 70% of mortgage interest payments if they lose some of their income. The plan is one of several initiatives that have been launched recently by the government to stop repossessions.

Posted by flintster1994 @ 02:01 PM (1531 views)
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15 thoughts on “More useless measures.Role up your interest payments? Financial suicide!

  • flintster1994 says:

    Note that the majority of lenders that are participating in the scheme are tax payer owned.

    Roll up your interest payments, to get into worse negative equity quicker! LOL

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  • Flinster this is a contrived and cynical operation in my view. If Labour loses the next election they can then blame the tories IF the tories then apply the repossession orders. “We did what we could then them nasty tories B’stards took your homes of the hard workers that have fallen on (through no fault of their own) bad times”.

    If Labour wins? Then perhaps they will come up with another scheme or even write off a portion of the debt. This reminds me of the Tories Right to buy legislation – just as cynical.

    So if you have a £400k mortgage but less than £16k in savings then what have you been doing? A gamblers charter dressed up for the common man.

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  • If I read this correctly, to qualify you have to be

    a) out of work unexpectedly.

    b) able to prove that you will be back in work within a year so.

    OK, there’s plenty of people in category a), but how many of them can prove they’ll have a job in a year’s time?

    A bold announcement originally unthought through and unplanned, now watered down to the point of non-existence..

    ..how very New Labour…

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  • taking of nasty tory b’stards – i thought Stewart Lee’s comment last night about David Cameron the weathercock was quite amusing.

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  • flintster1994 says:

    Agreed techieman.

    Labour, or any other party for that matter, have no idea how to resolve this current mess. I’m not even sure that they believe there is a painful solution that would be unpalatable to most of the electorate. It’s all about staying in power, end of.

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  • little professor says:

    Here’s a take on the scheme from the non state-owned media:

    FT: Lenders fail to join mortgage support scheme

    Lenders representing more than half of Britain’s mortgages have failed to sign up to the government’s flagship mortgage support scheme.

    Instead the only big groups to join the project are the nationalised banks, which were under pressure from ministers to do so.

    The government claimed that lenders covering more than 80 per cent of the mortgage market would “now be providing enhanced support to their customers.”

    In reality the figure is about 46 per cent, made up of Lloyds Banking Group, Northern Rock, RBS and Bradford & Bingley – as well as building societies Cumberland, Clydesdale and Yorkshire Bank.

    The low take-up of the scheme follow fears within banks that they could face a wave of lawsuits for mis-selling if house prices continue to fall.

    The Council of Mortgage Lenders told the prime minister that its members needed to ensure they would not be sued by homeowners who could lose money if they are encouraged to stay in their properties.

    Barclays, HSBC, Nationwide and Santander – which owns Abbey and Alliance & Leicester – said they would not take part in the initiative, despite being offered a government guarantee for borrowers who defaulted.

    Instead they said they would as ever continue to act reasonably when dealing with customers who fell behind on their mortgage repayments.

    A string of other lenders said they would join the scheme “as soon as possible” but not yet, despite it first being announced in the Queen’s Speech in December.

    These included Bank of Ireland, GMAC, GE Money, Kensington Mortgages, Standard Life Bank and the Post Office.

    Home owners who take part in the “Homeowners Mortgage Support” scheme will be allowed to defer all of their capital repayments – and up to 70 per cent of their interest – for up to two years. They will be eligible if they have lost their job.

    The deferred payments will be added on to the final years of their mortgage, which will retain its original duration.

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  • little professor says:

    The point about the banks being sued if prices continue to fall is a key one. Many struggling borrowers who overstretched themselves to buy at ridiculous income multiples would be better off taking the hit now and getting repo’d, rather than waiting two years, having interest accumulate further and the shortfall in their house price escalate.

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  • I read the headline and instanly hought – damn it, knew I should have bought at Christmas time. Then on closer examination as you all quite rightly point out you’d have to be a pretty lucky person to actually qualify. In fact the sort of lucky person that wouldn’t loose their job in the first place.

    I noted the £400k mortgage bu less than £16k savings aswell. Funny how you only get help if you’re reckless.

    Suspect alot of people though will play the card of retaining profits in their company and not paying themselves hence qualifying as they can show the mony is there to resume normal payments in a year or 2, without actually having the money themselves.

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  • LP wont the banks have a defence by saying that if they accept the offer they will be acquiescing and waving their right to sue anyway? Estopel type thing? This is from a lay person not a lawyer so go easy!!

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  • Has anyone worked out though the extra cost to the taxpayer should the scheme be popular and prices fall say 20-30% over the next 2 years without the applicants getting new jobs ?

    And indeed could the government be sued for misselling ? Or should that be the tax payer.

    Surely the point that house prices can fall as well as rise in bold letters across the bottom of mortgage application forms must count for something, or has that been dropped since Gordon Brown announced he’d found a solution to Boom & Bust.

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  • This is very generous of them: 70% of mortgage interest payments – as interest is now at 0.5% this is hardly anything – they aren’t offering to pay the capital are they?

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  • str 2007 said, “Suspect a lot of people though will play the card of retaining profits in their company and not paying themselves hence qualifying” –
    These people are not unemployed, and hence cannot qualify… however if your money has been spent on “non-liquid investments” (e.g. jewellery or art) now you are talking.

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  • str 2007 ^^ (cont…) although I suppose one may qualify due to a lower income in your scenario.

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  • Reply
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  • 666

    Absolutely, reduced income qualifies, so simply leave money in your business and pay yourself £5k tax free and claim, claim, claim.

    I suspect the ethics of alot of entrepreneurs mean they don’t like going down this route.

    However, all they probably wanted in the first place was a level playing field and stable economy on which to ake their business decisions. They themselves have not brought about this bust.

    If they don’t hang onto their money carefully they may not have any left in 3-5 years time when the economy may start to pick up.

    Harsh but true.

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