At McLean Financial Services we have always focused on delivering the best customer service and this hasn’t changed despite the global pandemic we are currently facing. We will be using our blog to answer some of the common queries we are encountering daily as a result of these strange times we find ourselves in. The first topic in this series is the mortgage payment holidays.
Lenders have actually always had this facility available to help those who are struggling to pay their mortgage. So what makes it different this time?
According to Money Advice Service (MAS)1 each lender will have a fast track process and those applying for the payment holiday should not be subject to an affordability check. Previously you would have to apply for this facility and go through a detailed discussion of your circumstances in order to qualify, the decision was then very much at the lender’s discretion.
Money Saving Expert Martin Lewis2, says otherwise. He advises that it is not mandatory for lenders to grant a payment holiday however you do not need to prove how the Corona virus has affected your finances in order to qualify.
The mortgage payment holiday is a temporary cessation of payments for three months. You will still accrue interest and the Lender can do one of two things;
- Extend the mortgage term to accommodate the three month payment holiday.
- Keep the same term and add the delayed payments to the existing term.
Most lenders will go with the second option which will result in a higher monthly payment, something to be aware of. So far only Barclays has offered option 1 to their customers.
Your credit score will not be adversely impacted for taking a payment holiday. Make sure you have agreed a payment holiday before you stop paying.
A mortgage payment holiday during this time might help ease your financial worries particularly if you are suffering from a loss of income or are self employed. It’s worth noting that there may be other options to review your current mortgage first and that’s where we can help, if in doubt talk to us in the first instance.
Here’s a summary of what to do if you feel you need to apply for a payment holiday:
- Check with your lender about their process for helping those affected by the Corona virus.
- Do it online where possible as phone calls will, most likely, have a long wait time.
- If you’re already in mortgage arrears be upfront about your situation and ask for help.
Our experienced mortgage advisers are available to chat online or via phone if you need some help. Call us on 01224 947 670 for an appointment.