The Prime Minister Gordon Brown has unveiled a 2-year deferment of mortgage interest payments for hard working borrowers who experience a loss of income.
Speaking in the House of Commons this afternoon, Brown unveiled three additional forms of protection for cash strapped home owners.
The deferment of mortgage interest payments for two years is rumoured to apply to properties worth a maximum of £400,000.
The eight largest UK lenders have so far signed up to the plan, but not the sub-prime lenders who are often quickest to repossess when arrears mount up.
In addition to an existing agreement that all lenders will not repossess for the first three months of arrears, three lenders have also now agreed not to repossess for 6 months.
Along with Royal Bank of Scotland, government owned lenders Northern Rock and Bradford & Bingley have also agreed to give struggling borrowers a stay of execution.
Brown says: "I urge all responsible banks to follow this example."
The government is also offering free debt advice up and down the country to help borrowers who find themselves' in financial difficulties get back on track.
Michael Coogan, director general of the CML, says: "The government's recognition that it needs to offer increased support to help keep more people in their homes is welcome, and we will work with Ministers to make sure the suggested scheme will help in practice.
"In my speech at our annual conference yesterday, I emphasised our preference for changes to widen income support for mortgage interest and wider ranging mortgage rescue proposals.
"We await further information on the proposed guarantee, as the devil will be in the detail."
And Peter Williams, executive director of the Intermediary Mortgage Lenders Association, praised the deferment of interest payments as a good example of a creative solution devised by both the government and the lending industry.
He says: “IMLA looks forward to taking a proactive role in working out the details of the scheme with lenders and with government, enabling unpaid rolled up interest to benefit from a government guarantee so that borrowers will remain secure in their homes.”
I read about this John....the devil is in the details-there is a vetting procedure to see if people qualify:
1. Your income must have dropped,or a partner loses job
2. You have to change your mortgage to Interest only payment
3. The Banks will decide who qualifies subject to assessment - to avoid irresponsible abuse.
You can't just say I can't afford my mortgage and get 2 yrs payment holiday....
