For most people the biggest monthly outgoing will be your monthly mortgage payment. If you find yourself subject to financial hardship due to Covid-19 crisis you may be aware of the recent pledge by the chancellor to implement payment holidays of up to three months for borrowers who are struggling to maintain their mortgage payments.
A mortgage payment holiday will offer some assistance by allowing you to stop or reduce your monthly payments for up to three months. This may not be suitable for everyone but could very well offer vital assistance if you need it. However, you should be aware that this not “free money” and will have to be addressed in the future to bring the mortgage up to date. For this reason, it is important that you only take a payment holiday if it is absolutely necessary.
In normal circumstances, lenders will all take different views on payment holidays and not every lender will offer the facility. However, the situation we currently find ourselves in is far from normal and lenders are doing everything they can to help borrowers through this difficult period.
The lender will probably spread your outstanding payments over the outstanding term of your mortgage, which will result in an increase to your monthly mortgage payments. Obviously, the less years remaining on your mortgage, the larger the increase in your monthly payments will be, once the mortgage payment holiday has ceased. You should therefore consider carefully the impact this will have on your future financial commitments.
Initially you must contact your lender directly and tell them you are experiencing payment difficulties. There should be a fast track approval process in place and you should not need to provide evidence or undergo affordability testing. You should therefore get a rapid decision. While any unpaid interest will still need to be paid back at some stage you won’t have to worry about any additional fees or charges for this facility. Individual credit ratings should not be affected but if you are worried you should speak with your lender.
There may be other options that your lender may offer, should they consider them to be more appropriate to your circumstances. Some lenders will consider extending the term of your mortgage. For some borrowers making a reduced payment of interest or capital only could be an option. You should speak to your lender and ask them to give an explanation of what this will mean for you and understand any other options which may be available to you. The more you are able to pay now, the less you need to catch up on in the future.
If you are currently under an arrangement with your lender, being behind already with your mortgage payments should not exclude you from applying for a mortgage holiday if this is appropriate for your circumstances. You should not be at risk of losing your homes during this period but do speak with your lender.
Below we have direct website links together with any appropriate guidance notes from some of the major lenders. These will assist you in getting to the correct department quickly with your enquiry. If you have any other questions or concerns regarding your mortgage, please contact one our expert advisers for a discussion.
Bank of Ireland
The Mortgage Works
To request a payment holiday, you should email SLPaymentholiday@nationwide.co.uk and include the following information:
Mortgage account number
Mortgaged property address
You also need to state the following
I confirm I am in financial difficulty
I confirm I am affected by Coronavirus
I confirm I understand when my payments start again, my mortgage payments and interest may increase
I confirm I have consent from everyone named on the mortgage
I confirm I’m happy for TMW to reply to me by email
If any of the information is incorrect or you don’t include the above statements, there will be a delay to the request.