Mortgages with payment holidays on the increase

The proportion of mortgages offering payment holidays is on the increase, according to price comparison site MoneyExpert.

Research from the website shows that 58% of the 2,058 fixed, discounted and variable-rate mortgages currently on the market offer customers some form of payment holiday facility.This marks an icnrease from September 2006 when only 44.5% of fixed and discounted mortgages included payment holidays.

A payment holiday allows borrowers to take a break from repayments, with some lenders allowing a break of between three and 12 months. Borrowers usually need to have been with their lender for a certain period of time and have kept up to date with their repayment schedule to date in order to take advantage of such facilities.

Sean Gardner, spokesperson for MoneyExpert, said: "Homeowners looking for competitive mortgage deals in the new tougher mortgage market might be attracted by the prospect of taking a payment holiday to ease the financial burden if things get tough or if their circumstances change.

"Despite the Chancellor's call for lenders to increase access to mortgage holidays, it's worth remembering that a break from paying monthly doesn't mean a break from paying interest - that'll continue to roll onto your debt until you repay it in full."