Payment holidays could help those facing higher rates on mortgages and other loans.

MoneyExpert.com suggests that some homeowners could be entitled to mortgage payment holidays, which could ease the pressure on those that are seriously struggling to stay afloat as the credit crisis grips Britain’s households.

In terms of loan interest rates, analyst at Moneyfacts.co.uk, Michelle Slade, said: “Since the beginning of the year more than half of lenders offering personal loans have made changes to their rates. Black Horse has increased rates for those looking for smaller loans by as much as 11.0per cent, adding £52.68 in additional interest over a year. NatWest has increased rates on the largest loans by 1.5per cent, adding £1,015.20 to the total cost.

“In the last two weeks alone we have seen Barclaycard (+0.5 per cent), Lombard Direct (+1 per cent), The AA (+0.1 per cent), NatWest (+2.5 per cent) and Tesco Personal Finance (+0.6 per cent) all push selected rates upwards. On top of this Barclaycard has pulled the one time best buy product offered through its Masterloan brand.”

Moneyfacts.co.uk’s advice to loan customers is to be aware that advertised typical loan rates are not always the rate that will be applied to every loan, it will depend on the size of the loan and repayment period. It also suggests that payment protection insurance can cost more than it is worth.

It encourages borrowers to shop around before taking out a loan, as the customer’s bank will not always offer the most competitive deal. And finally, it warns customers not to apply for multiple loans as this will affect their credit rating and may prevent them from getting a loan, or force them to pay higher rates.

If people are still struggling to juggle mortgage and loan payments, they could look into taking mortgage breaks, according to MoneyExpert.com. It claims that 58 per cent of the 2,058 fixed, discounted and variable mortgage products on the market offer customers some form of payment holiday facility.

MoneyExpert.com has revealed that the proportion of mortgages offering payment holidays has risen from 44.5 per cent of fixed and discounted mortgages in September 2006 to approximately 53 per cent now. Sean Gardner of MoneyExpert.com said: “With around six in ten mortgage products coming with a potential payment holiday written into the terms and conditions, cash-strapped homeowners can at least enquire about taking a break.

“Taking a payment holiday will need to be agreed with your lender and just because there’s a facility for it doesn’t mean your bank will let you off repayments easily. In fact while lenders are struggling your argument will need to be watertight – but banks would rather know you’re under the cosh now and intend to do something than wait until you’re defaulting because you can’t afford the repayments.”

He added: “Despite the Chancellor’s call for lenders to increase access to mortgage holidays, it’s worth remembering that a break from paying monthly doesn’t mean a break from paying interest – that’ll continue to roll onto your debt until you repay it in full.”

©Fair Investment Company Ltd