Lenders have agreed to give 1.2 million homeowners impacted by the Coronavirus crisis a mortgage payment holiday.
Action by lenders means one in nine mortgages in the UK or 1.2 million homeowners have been given repayment holidays according to UK Finance due to Coronavirus (Covid-19) pandemic.
The number of payment holidays granted are 61,000 per day tripling the total in place two weeks after lockdown measures were implemented to control the spread of the virus.
Lenders announced on 17 March they would support customers including remortgage buyers and home movers facing financial difficulty due to Covid-19.
Homeowners face cashflow problems
Demand for the three-month payment holiday increased from 392,130 on 25 March to 1,240,680 on 8 April with the average mortgage holder saving £260 per month in suspended interest.
The lenders will require the interest to be repaid so borrowers should call to determine if they are eligible and if this would be the best option for them and should only apply if this is needed.
Stephen Jones, UK Finance CEO said, we understand that the current crisis is having a significant impact on household finances for people across the country.
Lenders have a number of options available to help, and payment holidays aren’t always the right solution for everyone, says Stephen.
In March the three-months mortgage payment holiday was extended to buy-to-let landlords as it was important they avoid debts with the lack of rental income from tenants.
For Help to Buy schemes that are available to first time buyers and home movers the government also offered holidays on the interest payments on the Equity Loans.
Risks of payment holidays
The government and the regulator the FCA have ensured that there will be no impact on the credit rating of homeowners that request a payment holiday.
However, it is the decision of the lender whether they offer a mortgage to a borrower and a payment holiday implies you are facing financial difficulty with affordability issues.
If you need help you must go to your lender and apply for the payment holiday and self-certify that the Coronavirus crisis has directly or indirectly impacted your income.
This could have implications for the future when you come to remortgage with a new lender or ask for a further advance with an existing lender as there will be evidence you may not be able to afford the repayments.
In contrast, older equity release buyers can secure fixed rates for under 3.0% using lifetime mortgage without any evidence of earnings and use this to improve your quality of life or pay for a loft conversion.
What are your next steps?
Talk to our London City Mortgage brokers for advice if you remortgage your existing home and want the best mortgage deal or release capital, buying your first home, moving home or a buy-to-let investor.
For older homeowners releasing equity from your property, our LCM mortgage advisers can recommend the lifetime mortgage, accessing wealth to maintain your lifestyle or even give to a family member.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the equity release calculator, mortgage monthly cost calculators, and property value tracker chart.
