Your Guide to Covid-19 Mortgage Payment Holidays...
As we enter the 4th week of restrictions in the UK, the mortgage lending market has been keen to emphasise how they are happy to help borrowers with payment holidays on their mortgage.
After speaking with many lenders, Fortem Financial Education can confirm that many lenders are currently looking at helping borrowers with a payment holiday of between one and three months during the Coronavirus Pandemic that has swept the globe.
What this means is, if you are struggling to pay your mortgage at this time, maybe because you have lost your job through redundancy or have been furloughed, your lender will help you with a payment holiday and many lenders have confirmed that this WILL NOT impact your credit score.
However, just because the option is there, it doesn't mean you should use it if you do not need to. Remember, this is merely a payment 'holiday', any mortgage payments that are part of the holiday will still need to be repaid and the lenders are suggesting one of two main options;
Option 1 - once your payment holiday is over, your new mortgage payment is increased for a period of time to reflect the amount you haven't paid. This will then repay the total amount of the payments previously missed and once repaid, your mortgage repayment will return to normal.
Option 2 - once your payment holiday is over, your mortgage payment will return to normal, but the term of your mortgage will be extended to ensure that the balance of the missed payments is in
If in any doubt about how this may impact you, speak to your mortgage lender as soon as possible. If you are concerned about whether you are going to be able to pay your mortgage, make your lender aware and they will look to help in any way they can.
Please remember, if you do not make your mortgage payments and you do not let your lender know, you do risk your credit score being adversely affected and in the worst case scenario, your home being repossessed. With that in mind, always keep your lender informed.