Mortgage holidays: all you need to know
Posted by siteadmin on Friday 3rd of April 2020.
With the possible financial hardship that the measures imposed due to COVID-19 may induce, the ability to afford mortgage payments is a concern for many.
If you need to press the pause button on your mortgage payments, this may be possible through a mortgage holiday. Although each lender has their own unique requirements and revised terms and conditions are being drawn up currently, a mortgage holiday could be a consideration to relieve a degree of financial worries.
What is a mortgage holiday?
A mortgage holiday refers to an agreement with your lender which lets you stop – or reduce – your monthly mortgage repayments for a fixed period.
Where can I get information on taking a mortgage holiday?
If you are concerned about mortgage payments and are considering taking a mortgage holiday, you may want to consider contacting the following, trusted organisations who will be able to offer information on your possible options:
- Your lender – before anything else, ensure you get in contact with your mortgage lender to express your concerns. They will be the best source to provide with information, unique to your personal circumstances and be able to explain their own, unique policies regarding taking a mortgage holiday.
- The UK Government – the Ministry of Housing, Communities & Local Government may be able to offer information on taking a mortgage holiday and possibly point you in the direction of other, dedicated services which will be able to assist you.
- Citizens Advice Bureau – your local Citizens Advice centre or the national centre may be able to provide you with information on mortgage holidays and direct you to services who can help.
- Business Support Helpline – as a business owner or someone who is self-employed, HMRC’s Business Support Helpline may be able to offer information regarding finances and taking a mortgage holiday. You can call 0300 456 3565.
What are my options?
Each lender is different and everyone’s financial situation is unique so it’s best to seek advice from one of the above or a dedicated mortgage adviser regarding taking a mortgage holiday. However, here is some general guidance on the options which may be available to you:
- Spread the cost over the remaining term – to cover the costs of a mortgage holiday, you may be able to spread the cost of the missed payments over the remaining term. It may also be possible to spread the cost over a fixed period.
Please note: you will be subject to more interest on such payments as the amount payable is greater
- Pay the cost at the end of your mortgage term – you may be able to add the costs of the missed payments onto the end of your mortgage payment term.
- Interest only – your lender may be able to offer you interest only payments on your mortgage for up to a year, providing you aren’t currently on an interest only agreement.
- Many more options – as previously stated, each person’s circumstances are unique and each lender is different, so there are many more options which you may be entitled to in order to take a mortgage holiday.
Other, important things to consider
When taking a mortgage holiday, there are multiple, important things to take into consideration. Here are the three most important things to take into consideration:
- You are likely to be asked to provide proof of hardship. This proof will be provided in different forms depending on the lender.
- If you’re on a fixed rate mortgage which comes to an end during a mortgage holiday, you may automatically switch to the lender’s fixed variable rate mortgage. Please note: Some lenders have stated you may be able to complete a product transfer if your fixed rate period ends whilst on a mortgage holiday
- Whatever form of mortgage holiday you decide to take, you will be liable to pay more interest.
For more information on mortgage holidays or for advice on taking one, contact our trusted team of advisers on 0121 285 8528 or email firstname.lastname@example.org
DISCLAIMER: As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.