The Chancellor of the Exchequer, Rishi Sunak, announced that UK lenders will be offering mortgage holidays for those struggling financially during these unprecedented times.
Mortgage lenders will now be offering a three month mortgage holiday (also known as a payment holiday) to those households who are struggling financially with the widespread impact of the coronavirus. Customers can also extend an existing payment holiday up to a maximum of six months in total.
This announcement is an attempt to offer much needed relief to homeowners who need to self-isolate but are worried about how they’re going to keep on top of their mortgage payments if they aren’t working.
What is a mortgage holiday?
A mortgage holiday doesn’t mean you’ll receive free money, it simply means you can relax a little as you won’t have to pay your mortgage for a few months until you’re back on your feet again.
Will I still have to pay interest if I take out a mortgage holiday?
The interest will still need to be paid but not during the mortgage holiday period. The interest, plus the regular mortgage payments, will need to be paid once your usual payments resume as normal.
For instance, if you have 20 years and three months left on your mortgage, you won’t pay anything for three months, and then you’ll see a slight increase in your monthly payments for the remaining 20 years, as you make up for the three month break you had. Lenders will check to make sure this will still be affordable for you in the long-run, and if it isn’t, they’ll discuss increasing your mortgage term instead.
Will a mortgage holiday affect my credit score?
Usually taking a mortgage holiday would affect your credit score, but in this case, lenders are saying that it will not have any detrimental effect on your credit score, going forwards.
If I’ve had a mortgage holiday before, can I have another one?
Yes, even if you’ve taken a mortgage break once already, you can still take another one.
I’m not struggling to pay my mortgage at the moment, but I’m worried that I might in the future – what shall I do?
You should carry on paying your mortgage for as long as you can manage to. If you know you’re going to struggle to make your next payment, the more notice you can give us the better, so please give us a call and we can discuss what your options are.
Can anyone apply for a mortgage holiday?
It’s specifically for those who are struggling financially at the moment. To apply, you’ll have to be up-to-date with all your mortgage payments so far.
How do I apply for a mortgage holiday?
Give your mortgage adviser a call and we’ll put you in touch with your lender.
Lenders have created a fast track system to approve applications as soon as possible. Your lender might ask you a few questions to try to understand exactly what financial difficulty you’re in, but don’t worry about this, it’s just to make sure that a mortgage holiday is definitely the right option for you.
What can I do if I’m struggling to pay the rent to my landlord?
If you can’t afford to pay the rent, your landlord will not be able to evict you, so you’ll also have some breathing space during this difficult time.
I’m a landlord and my tenant can’t afford to pay their rent. What happens to my mortgage?
Lenders have agreed that if you have a buy-to-let mortgage, you can also apply for a three month mortgage holiday by speaking to your mortgage adviser or lender.
Speak to your mortgage adviser
If you’re struggling with ongoing financial difficulty, mortgage holidays should not be treated as a long-term solution to this. They’re purely there to offer short-term relief for those struggling with their finances.
For more information about mortgage holidays, please get in touch with your mortgage adviser and they can put you in touch with your lender to find out if you’re eligible to apply.