On 17 March, the government announced that all lenders must offer payment holidays of up to 3 months to help borrowers, if they are having difficulty with their mortgage repayments as a result of their circumstances changing due to the Coronavirus pandemic.
It’s also worth pointing out is this offer is not a guarantee and each case will be assessed by the lender on an individual basis. Given that there are nearly 11 million mortgages in the UK, you can understand why this might take some time for all the lenders to process applications. Applying online rather than by phone will be a quicker option.
Borrowers have also been reassured that taking a mortgage holiday should not impact their credit score.
While this sounds an attractive option, borrowers need to be aware of the implications of this and should also consider the alternatives which may be less costly in the long run.
Notably borrowers will still be charged interest per month which will be added to the total cost. When the holiday is over, most lenders will recalculate the loan and most borrowers will find themselves paying more per month. Alternatively some lenders might increase your mortgage term.
Borrowers could consider switching to interest only so that they can at least cover the cost of the mortgage interest whilst, at the same time benefiting from lower monthly payments.
While there are broad guidelines for lenders, each will tend to have their own policies which could make a difference on whether to take a mortgage holiday or not.
This is where your mortgage adviser can help. RobMac deal with all lenders in the UK and as result understand what the alternatives are. It’s worthwhile speaking to one of our advisers to make sure that you make an informed decision about your mortgage.
Senior Mortgage adviser Alison Mitchell said “With all the different options available to clients at the moment, it is imperative that advice is sought. We can ensure that the action taken today is right for you and doesn’t hinder your plans in the future.”
If any of the above is of interest to you and you would like to discuss your financial position further, you can arrange to meet with one of our financial advisers by scheduling a meeting here >>
