Finalised details of the £1bn mortgage holiday plan allowing borrowers to defer some or all of their mortgage repayments for up to two years are likely to be published this week, with arguments continuing on whether lenders should take on some of the risk.
Intermediaries are warning that advising on the scheme could bring misselling complaints if clients end up in a worse position through taking up the holiday offer.
The scheme is now unlikely to extend the length of mortgages, meaning that borrowers will face increased payments once the holiday ends.
Savills director Melanie Bien says: “There is definitely a fear that the broker could be accused of misselling as there is a real risk of negative equity with this scheme. We need the details, as it would be a shame if the positive aspects of a mortgage holiday scheme were negated if advisers were too scared to advise on it.”
London & Country mortgage broker Richard Morea says that any brokers advising borrowers to opt for a mortgage holiday must be very careful.
He says: “Negative equity is a serious concern for homeowners right now, so adding this scheme on top of things could make it very difficult for borrowers. This is not the easy option for anyone.
“Advisers need to find out the details of this plan as soon as possible if they want to be able to balance the short-term and long-term needs of their clients.”
Brentchase Financial managing director Mike Fitzgerald says: “I think brokers will be reluctant to advise on another scheme and borrowers will be reluctant to take up the scheme because no other Government initiative has worked so far, so why should this one?”