Your rent or mortgage payment is often your largest monthly bill. Many families may face an occasional hardship or financial crisis. When this occurs, they often need some form of assistance with their housing costs. There are various local and national programmes that can assist. Funds may be issued to tenants for paying their rent and homeowners can also receive help with their mortgage.
Getting assistance with paying your housing expense is often necessary to compensate for short or long-term financial problems. There are several schemes and programmes for those people with the lowest incomes. However, the higher your income, the more likely that you may be limited to lender-based options for dealing with your housing payments.
Tenants who rent their accommodations will usually lack the collateral necessary for the larger loan options that are often available to homeowners. There are still resources available to them as well as some potential outcomes that are preferred to delinquency, eviction and default.
Programmes for tenants
- Landlord Work Around Agreement: You may be able to convince your landlord to agree to an alternate payment arrangement. This will allow you to catch up on and rent arrears by spreading the repayments across multiple months.
- Local Council Grant: There are available in most towns and counties. You could petition your local Council for short term housing assistance. If your request is granted, you could get temporary cash assistance for paying your rent.
- Council Interest Free Loans: Some government agencies partner with credit unions or they use money from their welfare scheme to provide financial help to tenants or families on a low income. The funds can be used for various expenses and provide borrowers a great alternative to payday lenders. Read more on how to get help with bills from council loans.
- Housing Benefit: This is targeted at lower income households plus those receiving other government assistance payments, such as the disabled, seniors, or mentally ill. This was previously known as the Local Housing Allowance (LHA) and many residents may be eligible for this benefit.
- Loans: A short-term financial crisis could be solved by borrowing money. This will ensure that you have enough cash on hand to pay all expenses that are due, including rent and utilities among others. There are both pros and cons to this approach. Find more information on loans for rent payments.
- Shelter Advice: The national homelessness charity Shelter can provide you with free counselling to deal with a rental shortfall.
- Eviction Prevention: Various aid programmes may be able to help you protect your rights as a tenant. If you have been formally served notice from your landlord, then they can also give you advice and assistance to avoid an eviction whenever possible.
- Affordable Rent: This is sometimes offered to the the most vulnerable. They may be able to take advantage of reduced rates through the Affordable Homes Programme. Eligible properties could be priced more than 20% cheaper than surrounding market rents.
- Social Housing: Approved landlords may provide private housing units to very low income tenants who are approved by your local council. The terms of this will vary as each council is responsible for setting the allocation scheme to determine who is available.
- Schemes for a deposit or paying rental costs: These are mostly provided by not-for profits and they are also fully backed by the government. Low income individuals can receive help for their housing costs from rental deposit schemes.
Assistance for Homeowners
Mortgage holders may be able to get relief through several options.
- Mortgage Loan Refinance: People of all income levels have been refinancing an existing home loan. Homeowners can extend the repayment term and possibly take advantage of a lower interest rate on their mortgage. As a result, your monthly payments could drop.
- Loan for Mortgage Payments: Borrowing money to pay your housing costs is not recommended to homeowners under normal situations when you are overextended. That being said, it can be a reasonable option if you need a cash injection to recover from a temporary crisis. You can preserve your on-time payment history and your good credit, but you will have an extra loan payment to make for a few months.
- Mortgage Loan Modification Programmes: You could capitalise your arrears through a home loan modification scheme. This can restore current payment status and reduce your monthly payment.
- Rescue Scheme for your Mortgage: This is a government administered programme. Up to £200m was allocated to the Mortgage Rescue Scheme, although funding has yet to be extended beyond 2015. Monthly payments can be reduced thanks to an equity loan that can be made available by the housing association.
Home Ownership Schemes
Tenants who would like to become homeowners may qualify for one of the government schemes that help prospective homebuyers clear the hurdles that make buying a home difficult.
- Help to Buy scheme: This new scheme reduces the down payment requirement for a new home purchase to just 5%. Properties with purchase prices of up to £600,000 may be eligible for the reduced deposit requirement.
- Help to Buy equity loan: The English government can provide a 20% loan towards the building costs of a new home. The loan carries zero interest for five years. The deposit requirement is only 5%. This leaves as little as 75% to be covered by a mortgage lender. A recent change extends this special purchase equity loan scheme through 2020.
- Help to Buy mortgage guarantee scheme: Mortgage firms may lend up to 95% of the home’s value thanks to a mortgage guarantee from the government. This reduces the buyer’s deposit requirement to just 5% of the purchase price. The government guarantee substantially protects the lender from loss if the buyer defaults on the mortgage.
- Shared ownership schemes: These arrangements allow a tenant to enter into a fractional ownership agreement where they would purchase a share of the property. Most arrangements consist of a plan to buy 25% to 75% of the home, with the buyer paying rent on the other portion. The advantage of this option is that it allows for tenants to start building equity while delaying the full purchase option until a later date if their income increases to support full ownership.
- Older People’s Shared Ownership: OPSO schemes allow for tenants aged 55 and above to purchase up to 75% of the home. The advantage is that no rent is due on the other 25% once the buyer owns 75% of the property.
- Home Ownership for People with Long-Term Disabilities: HOLD schemes offer additional flexibility to potential buyers who cannot find a suitable property to purchase through other ownership schemes. The primary focus is on helping a disabled buyer purchase a home that meets their mobility/independence needs.
- Right to Buy schemes: Tenants who have occupied their home at least five years may opt to purchase the home at a major discount. These schemes are limited to those living in council-owned housing, although some housing associations also allow a similar scheme.
- NewBuy scheme: The advantage of the NewBuy scheme is that their is no income limit. A low 5% deposit requirement means a newly built home can be purchased through the arrangement with a purchase price of up to £500,000.