With the recent coronavirus outbreak, families across the country have been understandably concerned about how they’ll meet financial commitments if they’re off sick, lose their job or become furloughed. The subsequent announcement from the government that there would be a ban on evictions as well as the availability of a mortgage “holiday” for those affected, was therefore welcome news for many, but this doesn’t mean everyone should jump to take advantage of the offer.
A mortgage break will definitely relieve some pressure for those impacted by the current situation, and it’s one less thing to worry about at a particularly stressful time. But what’s important to remember is, you will need to make these payments back later, so if you’re able to keep paying your mortgage as normal, it certainly makes financial sense to.
First of all, you’ll need to check whether you are in fact even eligible. Whether you are able to, and the terms of this (such as length of time and conditions), will depend on:
It’s important to note that if you’re in mortgage arrears, you won’t be eligible for a mortgage break, however you may be able to come to an arrangement with your lender if needed.
Some families, where one partner has been furloughed and the other is on maternity leave for example, might be genuinely struggling to make ends meet.
However, if you are working from home, or if you’ve been furloughed but the 80% of your wages that you’ll receive from the government is sufficient for you to keep meeting payments (especially with many of us spending less during lockdown), then this would be advisable.
When the payment holiday ends, your outstanding mortgage balance and mortgage payments will be higher than they were before, so delaying this is likely to mean you’re worse off in the future. You might also still be racking up interest on your mortgage balance.
By requesting (or enquiring about) a mortgage holiday when you don’t necessarily need one, you’ll also be making it more difficult for people who desperately need one to get theirs sorted. With bank call centres closed, and many operating with skeleton staff, or staff working from home, there’s been reports that phone lines have been particularly busy.
If you do decide to take a mortgage holiday, it’s imperative that you don’t just stop your direct debit or standing order, as this will be a breach of your contract, putting you into arrears, and negatively impacting your credit score, which can make it harder to access credit in the future.
If you’d like free advice on whether or not a mortgage holiday is the right decision for you, or for help with the process, we’ll be more than happy to help. Our staff are working from home but please call, email, or submit a form on the website and one of our team will be happy to get in contact with you and talk you through your options. You can visit our mortgages page here where we have a mortgage calculator and means to contact a member of our team.