You may be aware that on March 17, Chancellor Rishi Sunak confirmed that anyone struggling financially as a result of the Coronavirus outbreak will be able to take a three-month mortgage repayment holiday.
A number of lenders had already announced repayment holidays for those affected by Covid-19, but the Government’s announcement means ALL lenders will now have to honour the three-month time frame.
A mortgage payment holiday is an agreement you will need make with your lender allowing you to temporarily stop or reduce your monthly mortgage repayments. Lenders have advised that anyone struggling with repayments should contact them directly. The repayment holiday will be available to borrowers who are up to date on their mortgage payments and not already in arrears. If you believe you will struggle to make repayments in the coming months, I would recommend you engage with your lender as soon as practical to agree the best way forward, which may or may not include a payment holiday.
Interest will accrue for the period of the holiday and payments missed will be added to the loan and repaid in the future – potentially over the remaining term of the loan. The credit reference agencies are engaged with the lenders and it is anticipated that borrowers’ credit files will not be negatively affected as a result of the three month payment suspension.
As your advisers we are here to help, so if you have any questions around either engaging your lender or more broadly around your protection policies or the wider impacts of the Coronavirus on your financial position please do get in touch.