Mortgage to Rent Scheme
Jan O'Sullivan has outline the Government's Mortgage to Rent Scheme for families struggling to pay their mortgages and could be facing into a repossession process by the banks. The scheme is aimed at low income families that are finding it difficult to keep up with their mortgage repayments and where there is little chance that their circumstances will change in the foreseeable future.
The scheme aims to help families stay in the family home, while ownership moves to an approved housing body and the family continue to pay rent on the property.
Many families have found themselves in a situation where income has dropped significantly from when they had received their mortgage. Now they are in a situation where they can no longer afford to pay their mortgage repayments. This is a distressing time for any parent and on their children. The turmoil caused to a family during and after a repossession process is a traumatic event. The government are now looking at the Keane Report with the aim to provide a mortgage to rent facility for these families.
The new scheme will be provided to families who have had their mortgage situation deemed as unsustainable, they have become eligible for social housing, are willing to agree to voluntary repossession of their family home and are in significant negative equity.
There are some other additional criteria that may apply: -
- Household income should not exceed €25,000 to €35,000.
- In Dublin properties must not be worth over €220,000 and €180,000 in the rest of the country.
- No other property must be owned and/or other assets may not be worth over €20,000.
- Property's accommodation must not be over or under the needs of the family.
Junior Minister for Housing. Jan O'Sullivan, TD said yesterday (28/06/12) "Mortgage to rent is very much a final option for low-income families facing severe mortgage difficulty. It is just one element of the range of solutions that the Government has been working on. It offers a viable, stable future for families on low incomes overwhelmed by mortgage debt and is a welcome development."
The application process will involve the following steps:-
- Families must surrender possession of their homes
- The house is purchased by an approved housing body at market rate.
- Purchase is provided by the original mortgage lender (70% to 75%) with (25% to 30%) coming from the exchequer.
- The family become a tenant of the Housing body, paying a rent based on their current income and ability to pay.
- The loss between the current cost price of the house and the amount paid by the owner (family) will be decided upon by the borrower and lender. In some cases the Government's new personal insolvency arrangements may come into play.
The map below outlines the number of test homes in each county that the department have in various stages of this scheme. It is hoped a further 40 families will be assessed by the end of the year.