Debt warning over Mortgage Support Scheme

The government’s mortgage rescue plans may provide breathing space but could significantly increase overall debt and lead to negative equity, experts have warned.

The new Homeowner Mortgage Support Scheme, announced yesterday by Gordon Brown after the Queen’s Speech, will allow homeowners facing a sudden loss of income to cut their mortgage repayments.

This will be done by the borrower deferring a proportion of their interest payments on their mortgage for up to two years – but deferred payments will be rolled back into the total still owed.

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