A clampdown will also be imposed on benefit payments to people from abroad who seek to alter Home Office entry conditions. Asylum seekers will not be affected.
The mortgage rules, affecting new claimants from 2 August, will put a ceiling of pounds 150,000 on the amount of help given through income support, reducing to pounds 125,000 from next April.
Peter Lilley, the Secretary of State for Social Security, said: 'Help with mortgage payments should be targeted at those with the greatest needs, and those who lend and borrow large sums should not do so at the taxpayers' expense.'
The move follows last year's disclosures that the Department of Social Security was paying the pounds 1,800-a-week mortgage of Peter Julien, a former millionaire.
A suggestion by the Social Security Advisory Committee of a concession for loans taken out by disabled people has been accepted. Mr Lilley said the changes were a first step towards encouraging home buyers to take greater responsibility in insuring themselves against risk.
The curbs on claims by foreign visitors will end the payment of income support to some 10,000 people and will save around pounds 17m a year.Reuse content