Several UK mortgage lenders have announced loan repayment holidays to support homeowners affected by coronavirus.
What is a mortgage loan repayment holiday?
Depending on your mortgage, you might be able to take a break from making repayments or reduce the amount you pay, usually for up to six months.
This will depend on your previous payment history, the type of mortgage you have and whether your lender offers this as an option. It must always be agreed with your lender – you can’t just stop payments if you’re feeling a bit broke.
This can be useful if you’re facing a temporary drop in income, for example during maternity leave, after a redundancy or in case of illness.
However, in most cases you will still be accruing interest on your mortgage and won’t be making any repayments, so your outstanding mortgage balance will be higher after a mortgage holiday.
How to go about getting a mortgage repayment holiday
Talk to your lender as soon as possible if you’re worried about making your mortgage repayments or fear you might fall into arrears.
If you find yourself struggling, make a proposal to your lender – you might not be able to afford to pay all your mortgage, for example, but you could offer to pay half. The important thing is to ask for help as early as possible rather than ignoring the issue. While lenders should offer support to borrowers, they can only do that if they know there is a problem.
Lenders aren’t under any obligation to give you a payment holiday and if you are a habitual late payer of your mortgage, they are less likely to be supportive. However, even if you are in this situation you should talk to your lender and see what can be done.
There is a chance that taking a mortgage repayment holiday could also affect your credit file, so my advice is to make sure you keep a note of any conversations and retain all correspondence in case the lender accidentally marks your holiday as arrears. That way you should avoid any issues when you come to re-mortgage.
If you would like to discuss any of the points raised in this article, then you can contact Samantha Allnutt, a Mortgage and Protection Advisor at WBW Mortgages, by telephone on 01803 500 544 or by email at email@example.com. WBW has nine offices across the South West in Newton Abbot, Bovey Tracey, Torquay, Paignton, Exeter, Launceston, Exmouth, Sidmouth and Honiton.
This article is for general information only and does not constitute professional advice.