Lenders have increased the number of mortgage deals that include a payment holiday facility to allow struggling customers to relieve the financial burden of repayments, analysis by MoneyExpert.com reveals.
Over the last six months the proportion of mortgages with a payment holiday has increased from 50.8% to 56.3% and the number of products with this facility has increased from 409 to 629.
MoneyExpert.com says 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 5 x 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 says 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, says: 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.
Youd think that the mortgage is the last thing youd 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 doesnt mean a holiday from paying interest thatll still roll up on your mortgage until its paid off.
A payment holiday shouldnt 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.