An increasing number of homeowners are opting to take 'mortgage holidays' as pressure on household finances intensifies and they struggle to make ends meet.
Several major mortgage lenders have reported a rise in the number of borrowers who are taking a break from paying their mortgage
, The Times has reported, which allows them to miss payments for anything from one month to as long as year.
This is indicative of the pressure felt by households as they are finding it increasingly difficult to put food on the table and keep up with rising fuel bills in addition to soaring mortgage rates.
Nationwide reported a rise in the number of its customers that are taking mortgage payment holidays
, although there had been no change in the number of people switching to interest-only or extending their mortgage terms, both of which could considerably reduce monthly outgoings.
Bradford & Bingley said that it has noticed an increase in the level of enquiries about mortgage holidays, correlative with its revelation that an increasing number of its customers have gone into arrears on their mortgages.
"An enquiry about a payment holiday is a likely indicator of financial trouble." said Sue Anderson, from the Council of Mortgage Lenders (CML).
While mortgage breaks are designed to allow homeowners breathing space if they experience unexpected circumstances or financial hardship, they can also prove damaging, as this money still needs to be repaid and will continue to accrue interest even while it is not being paid back.
Banks consider a number of unforeseen circumstances when allowing their customers to take mortgage holidays, including illness, unemployment, exceptional or unavoidable household expenditure, and tax bills. This can provide welcome relief to struggling households, but can also increase the repayments when the borrower resumes repaying their mortgage, and prolong the term of the mortgage.
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