The U.K. government is set to disclose further details on a scheme to stem the rising tide of repossessions.

Ministers have pledged up to £500 million ($720.8 million) to help struggling homeowners retain their homes. The details of the scheme are still being finalized and the government hopes that the scheme will be operational by the spring.  

Under the Homeowners Mortgage Support scheme, borrowers with mortgages of up to £400,000 could defer a percentage of their interest payments for up to two years, with the government underwriting a proportion of the lender's ultimate risk of loss. 

The scheme will allow borrowers to defer payments on up to 70% of their mortgage interest if they have suffered an income shock, such as losing their job or having their hours cut.

The U.K. government also pledged to guarantee 80% of the deferred payments if borrowers fail to cover their mortgages and subsequently lose their homes. If the repossessed property is sold at a loss, the lender will claw back money from the Treasury.

"This is not a free lunch for homeowners," Societe Generale analysts said. "They will have to pay back the interest, plus added interest in the future. Even when conditions do improve, gross lending will be one of the last measures to recover."

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