1 in 9 Mortgage Borrowers Have Taken a Payment Holiday, Homeowners and Landlords are Still Missing Out!
Figures revealed by UK finance have shown that 1.2 million mortgage payment holidays have been granted since the beginning of the coronavirus health crisis.
Financial difficulties because of the lockdown are a cause of concern for many households around the UK. Homeowners with mortgages are especially worried about keeping up with the repayments and buy to let landlords are also particularly affected because of the nature of their business and reliance on tenants’ employment status.
Mortgage repayment holidays are being offered of up to 3 months with a possibility of further extensions should the lockdown have to continue for longer than hoped. With 61,000 payment holidays being granted every day, these measures are proving a valuable lifeline to many. In fact, nearly 10% of people with outstanding mortgages are taking advantage of the offer, and that figure is very likely to increase.
Landlords whose income has been negatively affected will be especially relieved that they too are eligible for 3-month payment breaks.
Borrowers need to be aware that the specific terms of a mortgage payment holiday are set by the individual lenders and in practice it can mean that different providers offer differing terms, especially concerning interest rates.
During a mortgage repayment holiday, the interest on loans will still accrue at the ordinary rate, unless stated otherwise by the lender. Once the repayment holiday is over, borrowers will probably be allowed to repay all the extra interest in a one-off payment or add the extra amount to the balance of the mortgage – thereby increasing the monthly repayments for the full term of the mortgage.
According to UK finance, the average mortgage holder will accrue interest on their loan of around £260 per month. Over several months, that figure can build to a substantial sum.
If you are thinking about taking a mortgage repayment holiday, you need to go into it fully informed and with your eyes open.