Mortgage Holidays – The Things You Need To Know…
Mortgage lenders have announced that they will offer up to a three-month payment holiday to those directly or indirectly impacted by the Coronavirus (COVID-19) outbreak. With a payment holiday, you will not have to make any monthly mortgage payments for a set amount of time, in this case up to three months. However, it is important to remember that the money is still owed and the interest on the mortgage still accrues during a payment holiday. At the end of the payment holiday the lender will be in contact to assess circumstances and agree a manageable way to repay the interest charges incurred and make up the deferred payments. Each lender will have a range of options to do this. All of the high street lenders have set out details of how they are processing the requests and if you are unable to find out how to apply with your lender, get in touch and I will be able to access the information for you.
- Payment holidays are available to customers who are up to date on mortgage payments
- Do not cancel your mortgage direct debits as this will negatively impact your credit score. The lender will pause the payment at their end.
- In most circumstances the lender will require a 10-day grace period before the payment holiday comes into effect so please be aware of this as if your payment lands before the holiday begins, the payment will still be due.
- Payment holidays are also available to buy-to-let landlords if tenants have lost income because of the impact of COVID-19
- Customers will still owe the money where a payment holiday has been granted and interest will still accrue, so if you are able to make part of the normal mortgage payment to reduce the money owed or interest charges then you should consider doing so.
- Lenders will make every effort to ensure that the payment holiday does not negatively impact on your credit file.
- If already in arrears, you should contact the lender as soon as possible. Lenders will review any change in circumstances to ensure that payments remain sustainable.
- If borrowers are already experiencing financial difficulty, lenders have also agreed a three-month moratorium on residential and buy-to-let possession action, meaning that no homes will be repossessed at this difficult time.
If you have any questions on mortgage holidays or anything else related to mortgages or insurance, please don’t hesitate to get in touch.