Brown announces mortgage repayment deferral to reduce repossessions

Gordon Brown has announced plans to try and cut property repossessions. Under the new scheme, home owners will be able to defer their mortgage repayments by up to two years.

The government has agreed the £1bn scheme with Britain's eight largest mortgage lenders, including HBOS, Abbey and Nationwide, reports The Telegraph. The move will allow households with mortgages of up to £400,000 to defer interest payments for up to two years.

Home owners who are made redundant or suffer from a loss of income , such as losing bonuses or overtime payments, will be able to benefit from the scheme. It will also be available to two earner households where one person loses their job.

As the scheme only covers interest payments on mortgages, anyone with repayment mortgages will need to switch to interest only mortgages before they can take advantage of it.

Announcing the scheme in the House of Commons, 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.

Housing minister Margaret Beckett added: "This scheme will give households breathing space...and help ensure they do not face or fear repossession . It shares the risk of home ownership at this difficult time."

The exact terms of deferring the payments will need to be agreed between individual borrowers and their mortgage provider. The details of how the missed payments will eventually be repaid have not yet been announced.

The Council of Mortgage Lenders (CML) has welcomed the move. Director general of the CML Michael Coogan said: "The government's recognition that it needs to offer increased support to help keep more people in their homes is welcome and we will work with ministers to make sure the suggested scheme will help in practice."

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