Abacus Daily Debt News

Mortgage payment holidays ‘create more debt’

Those taking a mortgage payment holiday are putting themselves at risk of falling into greater debt, it has been claimed.

Head of personal finance at fool.co.uk David Kuo explained that those considering such move may end up paying more in the long term, as the interest will continue to accrue even though payments have been suspended.

"If you are taking this holiday for a month or a year, what you’ll end up with is a bigger interest bill at the end of the period, which will be added on to your loan," he noted, adding that government-backed payment deferral schemes operate on the same principles and interest will still have to be paid.

Those who had been considering applying for a mortgage payment holiday as part of a debt management plan may now wish to rethink their options.

Mr Kuo’s comments follow recent research by uSwitch.com, which found that as many as two million consumers are considering deferring their mortgage payments.

By Tom Musk