Could you do with a few months’ mortgage holiday?
The availability of a three month mortgage holiday was first announced in March 2020, as part of a package of support for individuals as COVID-19 spread rapidly through the UK. For the 1.8M people that took up the initiative in March, the holidays came to an end in June 2020, while the pandemic still raged on.
Mortgage lenders then announced their own support if your income had been affected by the pandemic, with a repayment holiday of up to a maximum of six months.
If you have not taken any holidays on your mortgage payments yet, you can apply for a payment holiday of up to six months in total. However, you should continue to make payments if you can afford to. The deadline for applying for a repayment holiday is 31st March 2021, so act now if you have not applied for a mortgage holiday and are still suffering a cash flow constraint due to the pandemic. Applying by end of March can still get you a mortgage holiday until 31 July 2021.
Your payment holiday can be up to a maximum of six months. If you have already taken the full six-month payment holiday, you cannot apply for another one, however your lender might be able to help you in other ways. Contact them so you don’t miss a mortgage payment and adversely affect your credit rating.
If you have already taken a payment holiday but not for the full 6 months, then this can be extended up to the maximum term. However, it’s in your best interests to start your repayments again if you can afford to.
Note that cancelling your direct debit is not a payment holiday and will be counted as a missed payment if it has not been agreed with your lender — possibly resulting in your credit file being adversely affected and impacting your ability to re-mortgage.
The main options your lender may consider for repayment once your mortgage payment holiday period is over are:
- Spreading your deferred payments over the outstanding term of your mortgage by increasing your monthly mortgage repayments.
- Increasing the length of your mortgage term, resulting in a smaller increase in your monthly repayments.
- Making interest-only or capital-only repayments during your mortgage holiday.
There is help for you out there and it can be flexible, but ultimately it needs you to ACT NOW. Call your lender by 31 March or you will simply miss out.