Government to guarantee mortgages

Published: Wednesday, 3 December 2008, 4:58PM

Plans have been announced to help people struggling to keep up with their mortgage repayments stay in their homes.

Under the Government scheme, households that have temporarily lost their income will be able to defer mortgage interest payments for up to two years.

The initiative will cover mortgages worth up to £400,000, with the cost being borne by the Government.

Gordon Brown said: "Hard-working households that experience a redundancy or severe loss of income as a result of the downturn will be able to defer a proportion of their interest payments for up to two years as they get their family finances back on track."

The Prime Minister said the measure was in addition to protection for the unemployed, who can claim help to meet payments after 13 weeks.

He said: "This measure will extend protection for those in work as well as those out of work and be available at a higher level of income."

Lenders who have already signed up to the scheme include HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays and HSBC.

The lenders are responsible for 70 per cent of the home loans held in the UK and further details of the scheme will be announced in the next few days, Mr Brown said.

"The result will be more affordable monthly payments for homeowners who are needing a bridge through difficult times," he said.

The Prime Minister also said Government-owned lenders Northern Rock and Bradford and Bingley had joined Lloyds TSB in agreeing that repossession proceedings would not begin until households were six months behind on their payments.

He urged other "responsible banks" to follow their lead.

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