Call Email

Mortgage Payment Holidays

Mortgage Payment Holidays
June 12, 2020

Homeowners who have taken mortgage payment holidays due to coronavirus can extend their payment breaks by a further three months, or start making reduced payments if they’re able to.

More than 1.8 million mortgage payment holidays have been taken so far by homeowners who have been financially impacted by the pandemic. The payment breaks were introduced in March, which means the first of them are due to finish in June.

Those who are still struggling to pay will be contacted by their lenders and offered a three-month extension to their payment holiday, along with other options, such as temporarily switching to an interest-only mortgage, or paying back a proportion of their monthly payments. Anyone who has yet to take a mortgage payment holiday will be able to do so until 31 October.

If you’re considering a mortgage payment holiday, or you’ve already taken one which you’re planning to extend, there are several things to consider first.

A payment holiday won’t affect your credit score, but it may be taken into account when you remortgage

Although taking a mortgage repayment holiday won’t affect your credit score, this doesn’t mean lenders won’t take it into account when you remortgage.

Some lenders may be more wary about accepting your mortgage application if you’ve had to take a break from payments in the past because you’ve experienced financial difficulties, so the sooner you’re able to get back on track the better.

Lenders will each have their own view on this, so it’s a good idea to seek advice from a mortgage broker about the best options for you.

The longer the mortgage break you take, the more your mortgage balance will increase

Taking a mortgage payment holiday may provide financial relief for a short period, but payments are only being deferred rather than written off.

This means when your payment holiday ends, your monthly payments will increase and be recalculated over your remaining mortgage term, so the longer the break you take, the more you’ll have to pay once your payments resume.

A spokesman for Halifax said: “Mortgage payment holidays can help with a temporary reduction in outgoings.

“However, your mortgage balance will increase and you will pay more over the term of your mortgage. So, it’s important that you only apply if you’re currently having difficulties making your mortgage payments.”

Some lenders have put additional measures in place to help customers affected by coronavirus

Check with your lender to see what other support they may be able to offer you if you’re struggling to pay your mortgage.

For example, Nationwide Building Society has said it will offer extended help to those affected by coronavirus, including the option for homeowners to make partial payments via temporary interest-only arrangements.

It has also promised that no-one with a Nationwide mortgage falling into arrears as a result of Covid-19 will lose their home in the next 12 months – until the end of May 2021 – as long as they work with the Society to get their finances back on track.

Santander and Nationwide, along with other lenders including Halifax and NatWest, have said that savings customers with money tied up in fixed rate saving accounts can access their money without penalty if it is needed to help them cover living costs, such as monthly mortgage payments.

Affordability criteria may have changed

If you take a payment holiday because your income has reduced, bear in mind that when you come to remortgage your lender will usually base the amount you can borrow on your new income.

For example, NatWest says that its affordability assessments will be based on the applicant’s new revised income whether it has changed permanently or temporarily, or if they are on the government’s Coronavirus Job Retention Scheme.

Nationwide will accept 80 per cent of income if a borrower has been furloughed, but won’t include bonuses, overtime or commission when assessing affordability.

Content provided by OnTheMarket.com is for information purposes only. Independent and professional advice should be taken before buying, selling, letting or renting property, or buying financial products.

"I'd just like to add on behalf of the family....thanks very much to all of you at the Property Store for managing the rental really well over the last 3 years. You've made it all such an easy experience for us. I'll definitely recommend your services to others in the future"

  • - Gina Warrender

"I have been a client with The Property Store for over 10 years, in that time I have got to know them well and value the service they deliver. The team have great tradesmen (Jim in particular) who are available at short notice. The office girls are so friendly, knowledgeable and above all helpful. You will be happy to be one of their landlords."

  • Susan Rooney

My experience with The Property Store, East Kilbride : Right from the beginning of my tenancy The staff at The Property Store have been so helpful and always attended to any issue promptly and efficiently. Every member of Staff I dealt with was highly professional, knew their job inside out and were friendly. I would like to mention Rachel in particular who I dealt with the majority of times. She is excellent at her job and I would not hesitate to recommend The Property Store to anyone looking for reliable Estate Agents.

 

  • Karen
  • - - Tenant

"Can you pass thanks on to the landlord. I've enjoyed living in the house it's just unfortunate my hip condition has deteriorated and caused me to move. I hope the new tenants enjoy their new home. Thank you to property store for all the help and support. A very professional team. I would highly recommend you to others."

  • Helen
  • - Tenant

"I would highly recommend The Property Store, Lorraine and her team are highly professional and efficient. The can-do approach that nothing is too much trouble is exceptional. Managing all our properties remotely was a great help and enabled us to carry on with smooth project running. The team took the stress out of the process but with a personal touch."

  • Simon Brown
  • - Operations Manager at Global Wind Service

"The Property Store was fantastic in finding me a property. They really took such a personal approach to finding me a suitable flat and take great care to ensure its the right fit. The staff are very friendly and will do everything they can to help in anyway they can. I would definitely recommend them to anyone looking for a property."

  • Debbie Fraser

"For some time I had been looking at further property development opportunities on a buy to let basis. As a landlord I had already been working successfully with the Property Store for a number of years and I took the opportunity to discuss this with them. Living remote from East Kilbride and having talked through my requirements it was clear that the most suitable option was for the Property Store to source, develop and let on a fully managed basis.

I have been very impressed with the speed that things have moved particularly how quickly the properties are upgraded and prepared for letting to the point where we have had tenants in advance of completion of works. As a result I have now added three properties in a matter of a few months.

As a remote landlord it is essential that you build confidence in the agents you are dealing with and the team at the Property Store have been excellent to deal with. They are a well-trained motivated team who know what they are doing.

The Property Store utilises the services of a number of key contractors with whom they have has a business relationship for many years. The contractors know the exacting requirements of owner Lorraine Robb and can be trusted to provide competitive quotes as well as completing works to a high standard. The Property Store fully inspect all works and provide regular feedback and are quick to take care of those small details that make all the difference.

I have no hesitation in recommending the Property Store to anyone considering a fully managed service from sourcing to redevelopment to letting."

  • Landlord and Investor

"From the time of meeting Lorraine and working with the team at The Property Store the customer service has been excellent and extremely professional."

  • - Fiona Kirk Landlord

"All of the staff are great, very professional, helpful and welcoming.
Made our journey very easy and stress free, would highly recommend them!!!
From viewing the property to handover of our keys everything was smooth, no issues and now have a very happy household
Thank you all for your help."

  • - Allyson

"Having previously rented accommodation with other letting agents in the area, The Property Store are miles ahead of the rest. Lovely maintained properties and professional and courteous staff. Highly recommend!"

  • Letting agents
  • - Claire Moran