Coronavirus - Payment Holiday Information
6th of April, 2020
Coronavirus – Should I take My Payment Holiday
Mortgage Payment Holidays
Lots of people have been asking me about the Mortgage Payment Holidays and whether they should apply for this.
Mortgage Holiday Proposition:
On March 17th, the government announced that anyone struggling as a direct result of the coronavirus can apply for a 3-month payment holiday from their current lender. This will apply to both residential and buy to let mortgages.
Please note, this payment holiday is not free money. You are not increasing your borrowing you are deferring payments to another time but the interest and capital due will still be payable and as the term may stay the same the payments will increase not the amount you are borrowing.
Should I take A Payment Holiday:
This is going to be down to each person’s individual circumstance. If you have been directly affected by the coronavirus and are going to struggle to meet your mortgage payment, then this is option should be considered.
However, you need to ensure you are aware of the implications of doing this. As above, this is not free money. The payments that haven’t been made will need to be paid at a later date before the mortgage term expires. This will normally be done by adding the 3 payments to the balance of your mortgage borrowing plus interest, which will be charged over the term of your mortgage. Although maybe not be a huge amount your monthly repayment will increase, and you will be charged more interest over the term of the mortgage.
Taking the payment holiday will not affect your credit file as long as you have been approved by your lender.
We are unsure of how long the lenders will accept applications for the payment holidays due to the coronavirus outbreak, they may impose a cut off date when you have had to apply by so please ensure this is information is checked with your individual lenders.
Lenders are getting overwhelmed by calls at the moment, so please free up the lines for people who need immediate help and where possible use the online options outlined below.
Please also remember that taking a payment holiday may impact on your ability to make any changes to your mortgage for the next six months for example, changing rate, changing product, borrowing more or remortgaging to another lender.
It is important to be aware that if your current deal is due to expire your lender may not allow a payment holiday till the product transfer/remortgage has completed. Please check this information with your lender.
Please ensure you have your Mortgage Account Number available (This will normally be on your mortgage statement).
Some important tips:
PLEASE DO NOT cancel your direct debit before you have spoken to your lender and been approved for the payment holiday, otherwise any missed payments could go down as arrears and will affect your credit report which in turn can affect you taking another mortgage/borrowing in the future.
KEEP a record of all conversations with your lender. If this is in email format keep the email trail and if this is via the telephone take a note of the persons name you spoke to and the date and time of the call, this is just in case you need evidence of the approval at a later date.
The advice is to CHECK YOUR LENDER’S WEBSITE FOR INFORMATION FIRST (some allow you to request a mortgage payment holiday online or have further information on what to do).
Please note this is not an exhaustive list, if your lender isn’t listed on here or your have any further questions please feel free to contact me on 07947 279519 or email [email protected] and I can look to help providing further contact information.
Please see a PDF download verson of this table here for printing at home.
PLEASE USE THE ONLINE OPTION WHERE POSSIBLE AS THE LENDERS ARE INUNDATED WITH CALLS AT THE MOMENT.