Interest Deferment Scheme For Secured Loans Is A Positive Move
As part of the rescue package which has been launched by the Government to help home owners who are struggling to keep up with their repayments on their secured loan, a new initiative was unveiled last week which could take a lot of the pressure off people who have lost their jobs and may well otherwise be facing repossession for defaulting on their loan repayments.
The new scheme allows a borrower to defer the interest payments on their loan for a period of up to two years, if they are unable to afford to make the payments in the event of them being made redundant and will provide help for anybody who has an existing secured loan or mortgage of up to £400,000.
Although the scheme has been widely welcomed by industry experts and is likely to save a large number of home owners from losing their homes, it should be noted that this is not a benefit scheme where the loan interest payments are made for the borrower, it is a deferment scheme whereby the borrower will still have to make the loan repayments at some point in the future and should be thought of as a safety net to see someone struggling with their loan through a difficult time.
One industry expert said “It is imperative that those people that need to take advantage of this welcome government intervention realise that they need to start repaying their mortgage interest on their own as quickly as possible.
The longer they put off paying means that they end up owing more in the long term as interest on the interest will keep ratcheting up. If those struggling to meet their repayments don’t quickly see a change in their circumstances, namely find a well paid job, then they may well end up in an even worse position than they were in when they applied for this state aid.”
