Now that the first weekend of Lockdown 2 is over, we thought that you might start to be wondering about a few financial fitness issues that come with the current situation that we all face.
Perhaps you have been furloughed or are working reduced hours or have had your salary cut. Maybe you are unable to work at all or have lost your job as a result of this latest measure to curb the spread of COVID-19.
This quick guide to the current situation around Mortgage Holidays might help you to decide what your next steps are:
What is a Mortgage Holiday?
Mortgage Holidays have always been around in some shape or another and different lenders have different rules and regulations on how they can be applied for. Since the COVID-19 pandemic and the introduction of national lockdown earlier this year, the government liaised with the lenders of the UK and introduced initially 3 month Mortgage Holidays so that people that are unable to or will struggle to keep up their re-payments, have a break that ensures they do not fall into arrears during this difficult time. This was later extended to 6 months and was open to anyone effected by the crisis.
Am I eligible for a Mortgage Holiday?
If you have been directly affected by the COVID-19 pandemic, then you may be eligible for a Mortgage Holiday. If you haven’t been affected by the pandemic, it is advisable that you continue to pay your mortgage as normal.
How do I apply for a Mortgage Holiday?
You do that directly with your lender, but you can speak to your Mortgage Advisor first to see what might be the best course of action.
I have already used some of the Mortgage Holiday during the first lockdown. Can I have another one this time?
The maximum Mortgage Holiday you can take, related to being directly affected by the COVID-19 pandemic measures, is 6 months. If you have already taken a 3 month break earlier in the year, then you can apply for a further 3 months now.
What if I have already taken the full 6 months this year, but I need a longer Mortgage Holiday?
You need to talk to your lender as soon as possible. The Financial Conduct Authority (FCA) is currently looking into further options and speaking to lenders to support people in these uncertain times.
If you are unsure how to approach your lender then reach out to your Mortgage Advisor. There could be other avenues for you and discussing your current situation is always a good idea.
I took a Mortgage Holiday last year and this year I have been affected by the COVID-19 pandemic and need to take another one. Is that possible?
The Mortgage Holiday has been announced by the Government to help people who need it during this difficult time. Of course each lender will have their own rules and terms, but if you are unsure of your eligibility, contact your lender to discuss your situation. Most have online forms you can fill in.
Will taking a Mortgage Holiday affect me in any way?
The government has reassured people that it won’t affect peoples credit files, however, future lenders could still look into the payment break for future loan decisions.
A Mortgage Holiday does not mean that the interest rate of your mortgage will also stop during this time. With this you should be aware that your interest rate can go up and your monthly payment will be higher than before your Mortgage Holiday.
Are there any other options?
Talk to your Mortgage Advisor. They will be able to take you through all of your options based on your current situation. At Mortgage Fit, we would say this should be your first port of call because it is better to know all your options before making any decisions.
Talking to Mortgage Fit could help you if you are not sure what to do next or what options you have. We are always available for a virtual coffee!
