More than 1.2m homeowners have been offered mortgage payment holidays by their lenders to help them weather the financial impact of coronavirus.
One in nine mortgages are now subject to a payment holiday, according to latest data from trade body UK Finance, with 61,000 payment holidays granted each day in the two weeks between 25th March and 8th April. The number of payment holidays in place more than tripled in these two weeks alone.
For the average mortgage holder, taking a three-month payment holiday will mean £260 per month in interest is suspended temporarily. This money must be paid back, however, so homeowners will face slightly higher mortgage costs once they resume their payments.
Stephen Jones, chief executive at UK Finance, 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. We would therefore encourage any mortgage customers concerned about their financial situation to check with their lender so they can find out more information on the support available and how to apply.”
Only apply for a payment holiday if you really need to
The three main credit reference agencies, Experian, TransUnion and Equifax, recently confirmed that homeowners’ credit scores will not be impacted by taking a payment holiday.
For those affected by the pandemic, payment holidays could provide a lifeline by taking some of the pressure off household finances at a very difficult time. You can find out more in our article 'Help with mortgage costs'.
It’s a good idea, however, to seek advice on the alternatives to a payment holiday before you act.
For borrowers who just want to reduce their monthly outgoings for example, this may include remortgaging to a cheaper rate, and the good news is that the remortgage market is still open for business.
Get in touch with us today and see if you can switch to a better deal.
One in nine takes mortgage payment holiday