19 Mar 2020
What is a Mortgage payment Holiday?
As a result of the current Coronavirus pandemic, the Chancellor has issued orders for UK mortgage providers to offer a repayment holiday of up to three months for home owners who are struggling financially.
UK Finance, the trade body for the major banks, has said there will be a fast-track system for approval.
A mortgage repayment holiday gives you some flexibility in paying your mortgage, by allowing you to stop or reduce your monthly payments for a set period of time.
It’s important to remember that even though you may miss payments due to the payment holiday, you will still have interest added to your mortgage.
It is not a long term solution but can be valuable where there is a temporary shortfall of income in these uncertain times.
Under usual circumstances, the lender would assess the customer’s finances and consider what forbearance options were the most suitable.
But in these extraordinary times, lenders are offering customers who are up-to-date with their mortgage payments – and who are impacted by coronavirus – the ability to self-certify.
Although a payment holiday would in normal circumstances, affect your credit score, lenders are speaking to credit reference agencies to ensure customers who take a repayment holiday are treated consistently and will make efforts to ensure that agreements offered under these circumstances will not result in an adverse impact on credit scores.