With the fears of house prices decreasing further in 2009 and many people struggling with their mortgage payments, there has been an increase in the number of people requesting a mortgage break or mortgage holiday from their mortgage lender.

These breaks are great at the time, but do mean mortgage repayments will be higher when recommenced and potentially the loan to value of a house will also dip – possibly even pushing some people into negative equity.

So what would happen if the loan to value of your home fell below the loan to value of your agreement with the mortgage company?

In many cases, the mortgage lender will not question it until it comes time to remortgage or you wish to move house, however, with some mortgages, especially flexible or current account mortgages, the loan to value is important to the running of the mortgage.

As quoted in the Daily Express earlier this month:

Louise Bond, personal finance manager at uSwitch.com, said: “Some flexible mortgage customers have already been asked to make a lump sum payment to their lender as the value of their property value has dropped below 90 per cent of the mortgage amount.”

If they do request this, they have every right to do so.

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