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30 April 2008

Homeowners may be entitled to mortgage break

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by Kay Mitchell

Homeowners may be entitled to mortgage break, the financial website, has revealed that some homeowners may be entitled to a mortgage payment holiday.

The idea of taking a mortgage holiday will undoubtedly be good news for many homeowners who are struggling to cope with increased monthly mortgage repayments and rising living costs.

Payment holidays allow homeowners to stop their mortgage repayments on a property for a set amount of time. However, homeowners must be aware that they will continue to accumulate interest.

Some mortgage products on the market such as fixed, discounted and variable include a payment holiday facility.

MoneyExpert said that the proportion of mortgages offering payment holidays has increased from 44% in September 2006 to around 53% currently.

Sean Gardner, MoneyExpert’s chief executive, said with around six in ten mortgage products coming with a potential payment holiday written into the terms and conditions, cash-strapped homeowners can at least enquire about taking a mortgage holiday.

Mr Gardner added taking a payment holiday will need to be agreed with your lender and just because there’s a facility for it doesn’t mean your bank will let you off repayments easily.

In fact while lenders are struggling your argument will need to be watertight but banks would rather know you’re struggling now and intend to do something than wait until you’re defaulting because you can’t afford the repayments, explained Mr Gardner.

Despite the Chancellor’s call for lenders to increase access to mortgage holidays, it’s worth remembering that a break from paying monthly doesn’t mean a break from paying interest – that’ll continue to roll onto your debt until you repay it in full, concluded Mr Gardner.

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