ROOF Blog

The government is to announce up to £500 million to help struggling homeowners keep their homes. It is expected that the homeowners mortgage support scheme will allow borrowers with mortgages up to £400,000 to take a payment holiday if they suffer an ‘income shock’. It will also allow borrowers to defer payment on up to 70 per cent of their mortgage interest for up to two years, with the government guaranteeing 80 per cent of the deferred payment if the borrowers fail to cover their repayments and lose their homes.

Banks have warned Gordon Brown that the £1 billion scheme to underwrite mortgage holidays for cash-strapped homeowners could result in a wave of lawsuits if house prices continue to fall. Homeowners will have to make higher payments once the holiday ends, or face negative equity, leading to fears that banks could be sued by homeowners whose properties had plummeted in value. Treasury officials believe that such fears can be allayed by legal warnings and an insistence that anyone taking up the scheme must take independent advice.