20 Mar 2020
In the light of the current Covid-19 situation, many may be facing financial uncertainty and as a result may be worried about how they will make their monthly mortgage repayments. To support these individuals, on Tuesday 17th March 2020 the UK government promised to implement mortgage repayment holidays for a up to a maximum period of three months for those who may need it. Officials also announced that during this time, credit scores will not be affected for those that apply for a mortgage payment holiday and applications will be fast tracked.
What is a Mortgage Payment Holiday?
A ‘Mortgage Payment Holiday’ is an agreement between an individual and a lender that allows the temporary reduction or complete pause on mortgage repayments dependent on circumstances.
What are the benefits of a Mortgage Payment Holiday?
The most prevalent benefit of a ‘Mortgage Payment Holiday’ is that it relieves pressure on individuals to make regular payments during times of hardship. For instance, temporary loss or reduction in income.
What should be considered when applying for a Mortgage Payment Holiday?
There are several important factors to consider when applying for a mortgage payment holiday. Firstly, while a payment holiday is a good solution if an individual’s income has stopped or paused temporarily (eg. due to maternity leave) it is not a suitable solution if income has stopped or reduced permanently. In addition, it is worth remembering that this isn’t free money and when the mortgage payment holiday comes to an end the outstanding balance on the mortgage will have increased.
How do I apply for a Mortgage Payment Holiday?
Those wanting to apply for a mortgage payment holiday should contact their mortgage lender to seek out their eligibility for a pause or reduction in repayments. Our mortgage partner, Mojo, have put together this helpful list of lenders who have dedicated mortgage relief teams.
If a Mortgage Payment Holiday isn’t right for me where else can I turn?
A mortgage payment holiday may not be right for everyone during the current climate. If this is the case, you should speak to your bank or mortgage lender about transferring to an alternative mortgage deal with lower interest rates. There may also be the option of switching to just paying off the interest on your mortgage for a more sustained period, instead of the full amount.
During these unprecedented times it is important to keep up to date with the news and keep aware of new measures and regulations that are being implemented to help support homeowners. Most importantly, seek help and guidance where needed. Hoppy is here to help with any queries around personal finance and home management you may have during this time and always, just head to the "Your money questions answered" page to find out more.