The Home Owners' Support Fund in Scotland

If you own your home in Scotland and you are at risk of having it repossessed, the Home Owners' Support Fund may be able to help you¹. It is run by the Scottish Government and is made up of two schemes: Mortgage to Rent and Mortgage to Shared Equity². It is designed as a last resort, for people who own their own home and are in danger of losing it because of financial difficulties³.

The fund works differently from most mortgage help. Instead of giving you money towards your payments, it changes who owns your home. Under Mortgage to Rent, your home is sold to a housing association or the local council, the mortgage and any secured loans are paid off, and you stay on as a tenant⁴. Under Mortgage to Shared Equity, the Scottish Government buys a stake in your property so you can reduce your loan⁵.

To qualify, you must have gone at least three months without making the full monthly payments on your mortgage or secured loan, and your arrears must be at least equal to one monthly payment in total³. You must also have been unable to agree with your lender how to manage those arrears³. Applications are made through an approved money adviser, not directly to the fund³.

What the Home Owners' Support Fund does for people facing repossession

The fund exists for a specific moment: when you own your home, you have fallen behind on the mortgage, and repossession is a real possibility. It is not a payment scheme and it does not clear your arrears while you keep the home on the same terms. Instead it restructures who owns the property so that the debt secured on it can be cleared.

The Scottish Government describes it as help for homeowners at risk of having their home repossessed¹. Independent guidance is blunter about where it sits in the order of options: it is the last resort when you own your own home and are in danger of having it repossessed because of financial difficulties³. That matters, because it means the fund is not the first thing to reach for when a payment is missed. Lenders have their own processes for arrears, and there are other forms of help, including free legal support for homeowners whose home is at risk⁸.

The fund is also not a way to stay an owner on unchanged terms. Both schemes involve a change: in one you become a tenant, in the other the Scottish Government takes a share of your home. What the fund offers is a route out of repossession, not a route out of the underlying problem. If your circumstances change and you can manage again, the position you are in will be different from the one you started with.

Because the fund is run by the Scottish Government, it covers homes in Scotland only⁹. Homeowners elsewhere in the UK cannot apply, and the help available to them comes through different routes.

Mortgage to Rent or Mortgage to Shared Equity: how each scheme works

The two schemes solve the same problem in opposite ways. One takes you out of ownership; the other keeps you in it with a smaller loan.

Under Mortgage to Rent, the local council or a housing association buys your home². The mortgage and any secured loans are paid off from the sale, and you continue to live there as a tenant rather than an owner⁴. Your housing costs become rent rather than mortgage payments. One important feature: you can apply to join the scheme even if you are in negative equity, meaning you owe more than the home is worth⁴.

Under Mortgage to Shared Equity, the Scottish Government buys a stake in your property so you can reduce your loan⁵. You stay an owner, but you no longer own the whole home. The idea is that a smaller mortgage is affordable where the original one was not.

The fund team decides which scheme applies when you apply, so this is not a menu you pick from². The decision turns on your circumstances and on whether the numbers work for each route.

Who can apply: arrears, residency and savings limits of £2,000 or £4,000

The eligibility rules are specific, and the arrears test is the one most people fall at. You must have gone at least three months without making the full monthly payments on your mortgage or secured loan³. On top of that, your arrears must be at least equal to one monthly payment in total⁶. Both conditions have to be met.

You must also have been unable to agree with your lender how to manage your arrears³. If you and your lender have already worked out an arrangement you can keep to, the fund is not the right route. And you must not normally own a home elsewhere¹⁰.

On savings, the figures that appear in the guidance and in comparable means-tested help are £2,000 and £4,000. The £2,000 figure appears in the rules for debt relief orders, where you must have savings or valuable items worth less than £2,000 in total¹¹, and where all other assets you possess must also not exceed £2,000¹². The £4,000 figure is the one commonly cited for the fund's own savings limit. Where the documents give different figures for the same thing, both are worth checking with an adviser before you rely on either.

If you are applying as a separated joint owner, your joint income will be considered¹³. That means both incomes are looked at together, even where only one of you remains in the home. The Scottish Government cannot buy out your partner's share of the property, so a separation where the home is jointly owned needs to be resolved on the ownership side before the fund can help¹³.

Where the Mortgage to Shared Equity scheme cannot help

Mortgage to Shared Equity is the narrower of the two schemes, and there are two situations where it is closed off entirely.

The first is negative equity. If your home is in negative equity, you will not be able to get help from the Mortgage to Shared Equity scheme. You may still be able to get help from the Mortgage to Rent scheme⁶. This is the clearest dividing line between the two: one scheme can work where the loan is bigger than the property is worth, the other cannot.

The second is where you bought the home through shared ownership or shared equity in the first place. You cannot join the Mortgage to Shared Equity scheme if you have bought a shared ownership or a shared equity house⁶. The reasoning is straightforward: the scheme works by the Scottish Government taking a stake, and that structure does not fit a home where a stake is already held by someone else.

If either of these applies to you, Mortgage to Rent is the route to look at, and the fund team will consider it as part of your application. If neither scheme fits, the section below sets out what else exists.

How to apply and how your home is valued

You do not apply to the fund yourself. To find out if you are eligible and to apply, you must visit an approved money adviser⁹. The adviser helps you complete the application form and provides a letter confirming that you have taken independent money advice³. Without that letter the application cannot be considered¹⁰.

The adviser is also the person who can answer questions about your specific case, including whether your arrears meet the test and how your income will be treated. Free and impartial debt advice is available from charities and from the national debt advice services, and an approved adviser will be able to tell you whether the fund is realistic for you before you spend time on the form.

Once an application is in, the value of your home is set by the fund's independent surveyors⁷. The process runs in two stages: initially as a desktop valuation and then a survey of the home⁷. The open market value that comes out of that process is the figure the scheme works from.

Other help if the fund is not right for you

The fund is one option among several, and for many people it will not be the right one. If you have been unable to agree with your lender how to manage your arrears, that is a condition of the fund rather than a bar to other help³, and there are routes that do not involve giving up ownership or taking on a government stake.

Support for Mortgage Interest is a government scheme that helps with the interest on your mortgage. It does not go towards the capital¹⁴, so the loan itself is not reduced, and it is means-tested. There is a loan cap of £200,000 for most working-age claimants¹⁵. If you are over State Pension age, the savings rules are different: you can have up to £10,000 in savings before it affects your claim¹⁶.

If you are not able to stay in your home, help finding somewhere else exists. Housing Rights can help you find suitable alternative accommodation¹⁷. For day-to-day costs, the Household Support Fund allows councils to give small grants to help vulnerable households meet essential costs, including paying for food and energy bills¹⁸, and it covers energy and water bills, food and essential items¹⁹. In Scotland, the Home Heating Support Fund is administered with help from consumeradvice.scot, who can make an application on your behalf²⁰. Fuel Bank Foundation vouchers are another route, arranged through your energy supplier²¹.

If you are not entitled to a State Pension, you might be eligible for Pension Credit or other benefits and financial support²². Free legal support is available for homeowners whose home is at risk⁸. And if you are struggling with other debts alongside the mortgage, debt advice services can set out the options, including debt relief orders, though those are not suitable for homeowners because of the restriction on the value of assets²³.