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Some people 'may benefit from a mortgage holiday'

By Jonathan Dawes, Mon 7 Jul 2008 - Published in Mortgages

Mortgage holidays can be useful in some situations but should not be used by homeowners who are struggling to meet repayments, according to the company Alexander Hall.

The mortgage advisory firm said holidays from loans can be beneficial for self-employed people when trade is slow as long as they can catch up on their payments during busier times.

However, Andy Pratt from Alexander Hall warned: "They're not intended to allow people to get through bad times, because you should be having a conversation with your lender then anyway if you're worried."

He added if your lender agrees to a mortgage holiday it would not have an adverse affect on your credit rating.

Last month, the Times reported more people are taking mortgage holidays.

The newspaper also claimed swapping to an interest-only deal on a £150,000 25-year mortgage at 5.5 per cent would reduce repayments by almost £250, while extending the mortgage by five years could save borrowers about £70 a month.