Banks and Building Societies have now extended the mortgage payment holiday for a further 3 months to help homeowners who have been impacted by the Coronavirus pandemic.
Lenders have also agreed to not proceed with involuntary repossessions for home owners who have either residential or buy-to-let mortgages until October 31 this year.
UK Finance, the mortgage trading body reported that 1.2 million mortgages are now covered by the payment holiday, which is equivalent to one in six home loans.
Chief Executive of UK Finance, Stephen Jones said “Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs.”
How a Payment Holiday works
The original payment holiday as announced on the 17 March and was intended to last for 3 months; however, this has now been extended for a further 3 months until September.
This means that mortgage holders who have been financially impacted by the coronavirus are allowed to ¨pause¨ their mortgage payments. As the payments are only deferred, the interest that has not been paid will be added to the outstanding mortgage debt, to be paid in the future.
Borrowers are encouraged to work with their lenders who will find the best solution for them arrange making repayments again. This could include;
- Extending the payment holiday,
- Revising the amount of repayments for a more affordable amount or
- Switching them into another mortgage product and granting an extension of the mortgage term.
Although there is now increased flexibility in payments options, UK Finance has advised owners to keep up with their mortgage payments if they are able to do so as the effect will ultimately be prolonging their overall payment terms.
Applying for a payment holiday
If you have been financially impacted by Coronavirus, contact your lender through their website. They will have a Coronavirus link for you to follow and many lenders have set up an online application form due to being inundated with requests to simplify and speed up the process.