Coronavirus – Mortgage Holidays

25 March 2020

Finding the money to make your mortgage payments is one of, if not the biggest financial concern most people have in these trying times. The government, for the first time in history, has unveiled measures to cover 80% (up to £2,500 a month) of peoples pay to ensure everyone has the funds available to cover their basic costs. 

However, if you find yourself in the position where, as a result of COVID – 19, you are unable to make your mortgage payment, you can apply to your lender for a ‘mortgage holiday’.

Furthermore, the government has banned lenders from charging for mortgage holidays and have gone so far as to say lenders cannot repossess homes during this time. FCA guidance has also made it clear that this should not have an impact on a person’s credit score. Saying "Payment holidays offered under this guidance will not have a negative impact on credit files. However, consumers should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions."

All of this is welcome news for homeowners and people with buy-to-let properties, who are also covered by the temporary payment holiday. Many of whom may struggle to pay for their mortgage(s) as a result of the pandemic.

 

So, if you find yourself in the position of needing help what do you do?

Obviously, every lender will have a slightly different procedure but in a nutshell: 

  • Call your lender, they will have a dedicated team who will guide you through the process and discuss the level of help you need.
  • Or if you have online banking with your lender this will probably be the most efficient way to apply. 
  • Have your mortgage account number to hand. Lenders cannot refuse to offer the mortgage holiday, however, just to be prepared have a good honest look at your finances, if you can, make a spreadsheet with what you have coming in and what you have going out before you speak to your lender
  • Remember, FCA guidance has also made it clear that this should not have an impact on a person’s credit score.

The support package generally on offer includes a 90 day repayment holiday. The 3 missed payments can then be repaid using various different options, including they can be added to your mortgage balance and spread over the remaining term, or your mortgage could be given a short extension.

An example of spreading the cost:

Let's imagine you have 19 years and three months left on your mortgage. For the next three months, you wouldn't pay anything. Then when your mortgage repayments resume, the total you owe would be spread over the following 19 years – so you would see an uplift in future payments, albeit a very small one. 

You can apply for a payment holiday at any time until the guidance is reviewed which is in 3 months of the announcement.

If you are worried, have questions about what you need to do or are wondering if you are eligible for help with your mortgage please do not hesitate to contact us for advice on 020 3745 5893.

 

 

Things are changing daily, please check the links regularly for the most up-to-date information. 

 

The Money Advice Service is a government site that has a wealth of information that is constantly updated. Here are some useful quick links:

https://www.moneyadviceservice.org.uk/en/articles/mortgage-payment-holidays

https://www.moneyadviceservice.org.uk/en/articles/coronavirus-and-your-money

 

For information on benefits currently available

https://www.gov.uk/government/publications/support-for-those-affected-by-covid-19/support-for-those-affected-by-covid-19

https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19

 

For all the up-to-date advice from the FCA please click here 

https://www.fca.org.uk/consumers/mortgages-coronavirus-consumers