Mortgage support benefit cap likely

HOMEOWNERS with mortgages of between pounds 90,000 and pounds 125,000 could find themselves having to pay additional bills of up to pounds 200 a month if they lose their jobs, writes Nic Cicutti.

The extra costs would come because the Government is considering capping the income support benefit it pays to cover mortgage interest payments. The new loan limit is expected to pounds 90,000, as opposed to the current pounds 125,000.

It is also considering banning the payment of benefit to cover mortgage interest to new borrowers after November's Budget. For existing borrowers on benefit, the 16-week period under which only 50 per cent of a person's mortgage interest is paid could be extended.

The changes being mooted are part of a review of welfare spending announced by Peter Lilley, the Secretary of State for Social Security, last year. However, a DSS spokeswoman said: 'All these reports are purely speculative.'

Sue Edwards, of the Citizens Advice Bureau, said: 'Trying to shift people from social security to private insurance is bound to make housing debt and repossessions much worse.'