The ongoing pandemic is a fast-changing situation, all the information written in this article is correct at the time of publishing.
Last week, the government announced homeowners and landlords can apply for a three-month mortgage payment holiday in response to the ongoing coronavirus outbreak. The change was announced in the hope of easing financial stress during this difficult and ever-changing time.
What is a mortgage payment holiday?
A mortgage payment holiday is an agreed break from paying your mortgage between the borrower and the lender. Dependant on the lender, you can either stop paying all or part of your monthly mortgage usually for an agreed time of three months.
It is important to contact your lender if you wish to have a mortgage payment holiday, as it something that will need to be applied for and will not automatically be in place throughout the pandemic outbreak.
Throughout your mortgage payment holiday, you will still incur interest. It is important to remember that you are still required to pay the amount that you have taken a holiday from. Your lender will explain the options on offer for you after the payment break.
Can anyone apply for a mortgage payment holiday?
Yes, if your financial circumstances have been affected by coronavirus. Each lender’s requirement will be different, however – proof of a change in financial circumstances will need to be provided.
Everyone named on the mortgage will need to agree and give consent for the payment holiday to go ahead.
Will a mortgage payment holiday affect my credit score?
The FCA has stated that it has been made clear to firms that every effort will be made to ensure that taking a mortgage payment holiday will not impact your credit score.
What happens after three months?
After your three-month mortgage payment holiday, your lender will contact you to discuss options on repayment. This can range from extending your agreed mortgage term or an increase in monthly payments.
If your circumstances are still affected after three months, further options will be discussed.
What happens if I’m renting but my circumstances have changed due to coronavirus?
It is recommended you contact your landlord if you will have difficulties paying your rent, as they can take a mortgage payment holiday on the property you reside in.
The government also announced that during this time, there is emergency legislation in place to protect tenants from eviction. This change means that landlords cannot start proceedings to evict social or private tenants for three months.
During this time, it is more important than ever to feel protected. If at any time you feel unsure or uneasy about your financial situation, you can contact your lender or alternatively seek advice from Citizens Advice.
Understandably lenders have recently been experiencing a high volume of telephone calls, and they will continue to do so in the weeks and months ahead. To help, some lenders have released online forms to help process mortgage holiday applications and to provide helpful advice.
If you’re struggling to reach your lender and have questions regarding mortgage payment holidays, then please feel free to get in touch with our team and we’ll be happy to help.