More lenders adopt payment holiday option
14 March, 2007
Over the last six months the proportion of mortgages with a payment holiday has increased from 50.8 per cent to 56.3 per cent. In real terms the number of products with this facility has increased from 409 to 629.
And MoneyExpert.com believes this demonstrates mortgage lenders’ increased commitment to offer greater flexibility to customers as they adapt to the changing mortgage market. Lenders have already relaxed limits on amounts that can be borrowed by lending up to five times income and have extended repayment periods from the traditional 25 years to as much as 40 years or more.
Payment holidays allow homeowners to stop their mortgage repayments for an agreed period. They are normally only allowed if you have been a customer for a set period of time and have regularly met your repayment schedule on your mortgage.
MoneyExpert.com said that normally homeowners look to a payment holiday if they become unemployed or switch jobs, take a career break, decide to start a family or lose another regular stream of income altogether.
Sean Gardner, chief executive of MoneyExpert.com, said: “Homeowners have been desperate to fix their mortgage rates in the wake of three interest rate rises in six months. Things are tighter than they used to be.
“But homeowners who are still looking for good deals may be attracted by the prospect of taking a payment holiday to ease the financial burden if things get tough or if their circumstances change.
“You’d think that the mortgage is the last thing you’d be allowed to let slip, but lenders want you to stay on the straight and narrow and would rather help than hinder.
“Of course, a holiday from paying monthly doesn’t mean a holiday from paying interest – that’ll still roll up on your mortgage until it’s paid off.
“A payment holiday shouldn’t be the main reason for switching or choosing a mortgage for the first time, but in an uncertain climate the attractions of a flexible mortgage with the option of a payment holiday is obvious.”
Providers that offer payment holidays include: Nationwide, Lloyds TSB, Halifax, Northern Rock, First Direct, Bradford & Bingley and Barclays.
