Covid-19 (Coronavirus) & Mortgage Holidays in the UK – All the Information You Need to Know

We’ve put together this quick guide to help provide a little bit of clarity when it comes to mortgage holidays in the UK amidst the Covid-19 (Coronavirus) outbreak.

However, if you have any queries or concerns about your mortgage, please don’t hesitate to get in touch with a member of The Mortgage Heroes today. We’re a trusted mortgage broker and will do all we can to help you and answer any questions you might have.

How Does Coronavirus Affect My Mortgage?

The UK Government has announced that they will support households affected by the Coronavirus outbreak by providing a three-month mortgage holiday.

This means that your lender will permit you to make no payments for the next 3 months.

The purpose of this new policy is to ease the stresses facing homeowners during the pandemic.

Do I Qualify for a Mortgage Holiday?

This mortgage holiday is available to those affected by Coronavirus (directly and indirectly) and are up to date on their mortgage payments. If you have arrears, you will need to contact your lender as soon as possible to discuss your circumstances and review your options.

You don’t need to have been tested positive for the Coronavirus in order to apply for this payment holiday. It is available to anyone concerned about their ability to meet their mortgage repayments – due to a loss of work, for example.
The mortgage relief is also available to buy-to-let landlords whose tenants have been financially affected by Covid-19. Any landlords who take payment holidays are expected to pass this relief onto their tenants.

Will I Still Pay Interest?

Although your mortgage repayment will change to £0, it is worth noting that you may still accrue interest during this period, depending on your lender. This will mean it will cost you slightly more – and probably take you a little longer – to pay your mortgage.

So, if you haven’t been affected by Covid-19 and are still able to meet your mortgage repayments, we recommend you continue to pay as normal.

Will My Credit Score be Affected?

No, your lender should implement steps to help ensure that your credit score isn’t negatively affected during this relief.
Lenders such as Barclays, Nationwide Building Society and Natwest, among others, have stated that their clients’ credit score won’t be adversely affected.

What is the Application Process?

To confirm eligibility for a mortgage holiday, lenders would normally need to conduct an affordability test to assess your finances. This process will not apply during the pandemic, however.

Instead, it will be replaced by a much more straightforward, self-certifying process. You won’t need to show any documentation, you just need to self-certify that your income has been affected (directly or indirectly) by Covid-19.

Landlords applying for a mortgage holiday will be required to self-certify that their tenants’ income has been affected.

How do I Apply for a Mortgage Holiday?

To apply for a mortgage holiday, you will need to contact your lender.
Your lender should supply you with adequate information about the implications of your mortgage relief, such as the consequences (if any) for the total amount payable under your mortgage contract, the term of your mortgage contract, and the amount of contractual monthly instalments.

What Happens After the 3 Months?

Once the 3 months have concluded, you will need to speak to your lender to discuss a manageable way for you to make up the deferred payments if it hasn’t already been agreed.

They will provide you with a range of options to account for the loss of the holiday, such as increasing your direct debit or extending your mortgage term.

Are There Any Other Options?

It is up to your lender to decide whether they offer you any other options. For example, rather than a payment holiday they may offer to reduce your monthly payments by extending your mortgage term, moving your mortgage to interest-only payments for a period, or adding the deferred payments to the overall amount you owe and spreading this cost over the remaining mortgage term.
Speak to your lender to find out what’s available to you.

What is My Lender’s Response to Covid-19?

Many lenders are still formulating their criteria and policy regarding the mortgage payment breaks. For the latest updates on your lender’s policy, we recommend you either visit their website, contact them directly or get in touch with our team.

Below is a quick summary of what some lenders are offering –

Barclays – Offering customers a number of options, including payment holidays for up to 90 days and a switch to an interest-only mortgage.

Nationwide – Support is offered on a case-by-case basis, including offering payment holidays where needed.

Santander – Offering support depending on your specific circumstances, including the option to deter or reduce mortgage repayments.

What About Repossessions?

The Financial Conduct Authority’s (FCA) new guidelines published on 20th March 2020 state that lenders should not commence or continue repossession proceedings at this time, irrespective of the stage that repossession proceedings have reached.

Lenders should keep you fully informed and discuss the potential consequential impact of suspending any moves towards repossession.

Can I Still Get a Mortgage During the Coronavirus?

Yes, providing that your personal circumstances don’t change, your mortgage application shouldn’t be affected by Covid-19. Most banks and lenders are operating as usual and are still underwriting and carrying out affordability checks. There may be a small delay at the valuation stage, but nothing too drastic.

Professional & Trusted Mortgage Support

For any help or advice in regard to your mortgage during the Coronavirus outbreak, please feel free to speak to The Mortgage Heroes. We’re a reliable mortgage broker specialising in helping clients across the UK find a mortgage and the right cover.

If you have any concerns about your current mortgage, contact our friendly team today – we will do all we can to help.

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See more: Remortgages FAQ – The Ultimate Guide to Remortgaging

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