Your Money
Are you struggling to pay your mortgage due to coronavirus? Below is some information which may help.
If you’ve not yet had a payment holiday you will be able to request one up until 31 March 2021. Generally, you’ll be given a three month payment holiday when you first apply
If you’ve already had one or are on a payment holiday you will be able to ‘top-up’ to a total of six months of payment holidays interestingly. If you’ve previously taken a two-month payment holiday, you’d be entitled to another four months to top up to the six-month. Your lender can only give a maximum of three months at a time, so you may need to take the three months, then ask for an extension for the final month.
The 31st March is the deadline to apply for new payment holidays, however, if you’re still on your first and it takes you past the deadline, you’ll be able to extend it. However, all payment holidays need to end by 31 July 2021.
It’s worth noting you will still be charged interest during the payment holiday; this therefore means you’ll likely end up paying more overall. So, if you can pay, it’s best to keep doing so and only take a payment holiday if you absolutely need to.
You don’t need to take a Full
Payment Holiday, if you need some help you can just take a partial payment holiday. By only taking a partial payment holiday, less interest will accumulate.
Your first six months of payment holidays WON’T be reported as missed payments on your credit file, however, it’s worth knowing that even though it’s not on your credit file, lenders can still find out about the payment holiday in other ways - for example, they can see your mortgage balance isn’t going down and new lenders can use that information to help their decision when you next apply for credit.
Should you take a mortgage payment holiday?
SWADStyle
Up to six months without paying your mortgage sounds like a good idea, however, you need to know that in the long run it will cost you more as interest will continue to be added so you will end up paying interest on the interest added and, there is a potential it could affect your ability to borrow money in the future. However, If you are struggling with your mortgage payments and other bills, it is better to take an arranged Payment Holiday than missing payments without an agreement in place. With this in mind the answer to this question is “if you NEED one, take it, but ONLY take it if you need it”
By Kevin Smith, Great British Finance
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