January 21, 2009
Borrowers Beware
The latest Government plans to give a mortgage payment "holiday" to people who lose their jobs has been widely criticised as to maybe offer a mixed message of irresponsible borrowing for people taking out a mortgage.
The Home Owner Support Scheme, announced last November, will allow people who suffer a drastic drop in Income to defer the interest only part of their mortgages for up to 2 years. It is aimed at homeowners with less than £16,000 woth of savings and with mortgage loans of up to £400,000.
Advice Agencies such as Credit Action, warned tht payment holidays would only be a temporary "BandAid", as interest would continue to accumulate and be added to the balance of the mortgage.
For example, a borrower with a mortgage of £250,000 paying 5% interest would add about £12,500 to there loan over a 12 month period.
A seperate £200m programme, The Mortgage Rescue Scheme, is being set up to help families with a combined annual income of less than £60,000.
Many landlords and buy to let investors are hoping that the legislation is extended to the property investment sector
