6 Months Grace on Repossessions
The Royal Bank of Scotland has extended the previous 3 month deadline to 6 months of missed mortgage payments before properties are repossessed. The announcement comes days after the Government took control of RBS having bought 58% of it’s shares. Ministers are beginning to apply pressure to other lenders to loosen the 3 month stronghold.
As repossessions and the amount of missed mortgage payments have been on the rise, this move has given some borrowers some much needed breathing space… Or has it?
Financial analyst Richard Northedge expressed concern regarding the initiative on his Director of Finance blog The Edge yesterday:
Given the time it takes courts to act, that could mean arrears of at least nine months before the bank gets its hands on its collateral.
Simply adding the missed interest to the principal over that period would increase a loan by 5 per cent – which with house values falling by 15 per cent a year would plunge many of the defaulting borrowers into negative equity.
The premise that those in financial trouble now will be in greater trouble later seems to be an ongoing theme among the response to the extension.
Read more here:
RBS, Repossessions and Recovery - bbc.co.uk - Preston’s Picks
Repossession: Q&A - Telegraph.co.uk
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