People in Wales who are struggling to make mortgage payments will receive interest-free loans for five years under a new £40m scheme.
The ‘Help to Stay Wales’ mortgage support scheme is aimed at those who are struggling with high interest rates, cost of living and are on the brink of having their homes repossessed.
Help to Stay Wales will work alongside support offered by mortgage providers through the UK Mortgage Charter for customers who are struggling to afford their mortgage payments.
The initiative will provide an option for homeowners who are at serious risk of losing their home by offering a partial repayment of an existing mortgage balance via a low-cost equity loan, secured by a second charge (behind first charge lender), reducing 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.
The purpose of the Scheme is to reduce the number of homeowners at risk of repossession and homelessness by offering them time to resolve their underlying financial issues.
The Minister for Climate Change, Julie James, said the new scheme was a “reaction to volatile interest rates.”
She commented: “The current economic climate presents many challenges for homeowners as they face the significant rise in fuel costs, high inflation, escalating rent and house prices with incomes often not keeping pace.
“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.
“I would like to thank UK Finance and mortgage lenders who are already supporting the Scheme, and I hope more lenders will be able provide their support over the coming weeks.
“We will continue to do all we can with the powers we have to help protect vulnerable households through this cost-of-living crisis.”
The Welsh government will offer equity loans to people who cannot afford their mortgage payments.
It will be open to people in homes worth up to £300,000 and with household earnings of no more than £67,000.
Eligible applicants could borrow as much as £147,000 to pay off some of their mortgage and lower their monthly payments.
They will need to give evidence of the difficulties they have, and will need to speak to an independent debt adviser before receiving the loan.
Because it is an equity loan, the money that has to be repaid could go up or down according to the market value of the home at the time that it is sold.
The loan is interest and repayment free for the first five years, but recipients could be forced to sell their home if they do not repay.
Jeanne Fry-Thomas of Ebbw Vale estate agents Bidmead Cook, commented: “The devil will be in the detail with this scheme.
“We are not seeing repossessions at the moment and we’re not seeing people coming onto the market because they can’t afford their mortgage payments.”
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