Mortgage Holiday For Homeowners Affected by the Coronavirus

Updated Wednesday 18th March 10am
Q: What if I’m already in arrears?2020-03-18T15:28:20+00:00

A: You should continue to speak to your lender. Lenders will review existing arrangements if there is a change in circumstances.

Q: What if I don’t own my property but rent instead?2020-03-18T15:27:41+00:00

A: You should contact your landlord or managing agent if you have problems paying your rent. If you are a landlord and your tenants are unable to pay their rent you should contact your lender as soon as possible to discuss the options that may be open to you.

Q: How will this affect my credit score?2020-03-18T15:26:48+00:00

A: Under normal circumstances, taking a payment holiday can result in your lender reporting the missed payments as arrears which would have a seriously adverse effect on your credit score and make it difficult to obtain credit in the future.

However, given the unprecedented nature of the current situation, lenders have confirmed that “help offered under these circumstances will not result in an adverse impact on the customer’s credit score.”

Q: How do ‘payment holidays’ work?2020-03-18T15:21:10+00:00

A: The mortgage repayment is deferred for a period. The monthly payment changes to zero, and interest accrues for the period. This may be particularly appropriate where there is a temporary shortfall of income.

However, this is not a solution where, because of a permanent reduction in income, a borrower is unable to afford anywhere near the full mortgage repayments and there is little prospect of an improvement in the situation in the foreseeable future.

Where repayments are deferred for a time, the borrower will need to make up these repayments in the future, which could be over the remaining term.

Q: How do I apply for a payment holiday?2020-03-18T15:21:34+00:00

A: You will need to contact your lender to request a payment holiday.

Normally, your lender would need to fully assess your finances and consider what options for assistance are most suitable.

However, lenders recognise that the challenges faced due to the Coronavirus are unprecedented and borrowers need a quick solution.

Therefore, customers who are up to date with their mortgage payments will be able to self-certify that they need help which makes the whole process quicker and more straightforward.

Should the customer wish, the lender could conduct a full assessment of their finances. It’s therefore important that customers who believe they may be impacted by COVID 19, either directly or indirectly, contact their lender at the earliest possible opportunity to discuss if the payment holiday is a suitable option for them.

Q: Are all customers eligible for a payment holiday?2020-03-18T15:19:54+00:00

A: In short, yes, but only if you are up to date with your mortgage payments.

Anyone who finds themselves in financial difficulty due to the Coronavirus can apply for a 3 month mortgage holiday provided their payments are up to date. However, a mortgage holiday isn’t always the best option for everyone.

A flexible approach will enable all types of lenders to offer the right support for customers. Many lenders will want to speak to customers to find out how they can tailor the best option for them.

Firms will help customers the best way for the individual, but an automatic payment holiday may not always be the most suitable approach and may not be required by all customers.

Firms will be speaking to credit reference agencies to ensure consistent treatment of those customers to whom a repayment holiday is made available.

By |2020-03-18T16:08:04+00:00March 18th, 2020|Categories: News|Tags: , , |