The Department for Work & Pensions is reforming the Income Support for Mortgage Interest (ISMI) system. This will be welcome news for mortgage holders who are worried in the current economic downturn.
At present anyone losing their job will not receive any government support to pay their mortgage for the first 39 weeks of unemployment, and after that the benefits will only cover the interest on the first £100,000 of the mortgage.
From April 2009 the rules will change and ISMI benefit will be paid on the first £175,000 of the mortgage and will cut in after just 13 weeks of unemployment, for new claimants.
In the current climate there is a good chance that an individual not able to pay their mortgage because they lost their job is likely to have their house repossessed long before the government assistance cuts in. From next April they will be eligible for more support, and after only three months.
But mortgage holders still need to be wary. There is still the issue though of how you would survive if you lost your job. You will still need to repay the mortgage for the first 13 weeks of unemployment, and after that ISMI only covers the interest on the mortgage. Although your house is more likely to be safe in future, you still need to consider how you will pay all those other bills as well.
Income protection insurance: News update: September 2008