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Saturday 06th of December 2008
December 4, 2008

Government proposes mortgage interest deferment scheme


by Gill Montia
Government proposes mortgage interest deferment scheme

The Government yesterday announced further help for mortgage borrowers who are falling behind with repayments.

The new measures should mean that middle-income homeowners who lose their jobs or part of their income are less likely to face repossession.

In a scheme guaranteed by the state, borrowers will be able to approach their lenders to request up to two years’ deferment of part of their monthly interest payments.

The unpaid interest will then be added to the outstanding mortgage balance.

According to prime minister Gordon Brown, lenders that have so far signed up to the scheme include HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays and HSBC.

Analysts are still studying the small print of the proposals but it is understood that loans of up to £400,000 will be covered.

Already this week, RBS and Northern Rock have pledged to give homeowners in financial difficulties a six month period of grace, before seeking repossession.

Meanwhile, the Financial Services Authority has written to the chief executives of mortgage lenders giving them until January to review their arrears and repossession policies and ensure that they are treating customers fairly.

The latest package of assistance comes in addition to proposed changes in benefits that will allow homeowners who have lost their jobs to claim help with mortgage interest payments after 13 weeks, rather than 39.

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