At the start of the Coronavirus pandemic, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday if they needed it. Most lenders followed the Government’s given guidelines and did their best to help their borrowers during the tough anticipated months ahead.
Middlesbroughmoneyman has thought carefully about the possibilities of what could happen to your mortgage over the next few months and is working very closely with all of our lenders to ensure that if anything changes, we can let you know you right away and recommend the best option for you to take so that you still feel secure, comfortable and happy with your mortgage.
Mortgage Payment Holidays are agreements entered with establishments such as Banks, Building Societies, or Mortgage Lender depending on who your mortgage is set up with. The agreement will allow you to defer your monthly mortgage payments for a set amount of time.
However, this will not mean that you do not have to pay the amount back. The interest that is deferred will be added back onto your loan amount whilst the capital balance stays the same. In other words, the overall mortgage amount will increase by a small percentage which will attract interest on the whole amount.
When you are in a stable position to continue your payments, there are methods where your monthly payments may be recalculated at a slightly higher level or your mortgage term is extended a bit further. Most lenders will have an option that they will prefer which will be to recalculate your payments for the reason that if some borrowers extend their mortgage term, it could mean that it could take them over standard retirement age and they could then be perceived as a risk to lenders.
Depending on the mortgage deal that you acquired, you may be able to pay off a lump sum later on to bring your mortgage back to where it would originally have been.
Mortgage payments are available to both types of borrowers who hold residential or buy-to-let mortgages, which means landlords also have assistance of rental payments are affected.
The full proposal is in detail below:
When it comes to Mortgage Payment Holidays, we recommend speaking to one of our Mortgage Advisors in Middlesbrough rather than going directly applying for a Mortgage Payment Holiday straight away if the situation is critical so you can make sure you’re making the right approach. Lenders will be overloaded with calls and will be adhering to making sure the most urgent cases are prioritized.
Our Mortgage Advisors in Middlesbrough will talk with you and offer the correct Mortgage Advice in Middlesbrough fitted to your situation and see all the alternative options available to you.
For a customer, up to date with payments, not in arrears and impacted by COVID-19, the process will be as follows:
Normally, a Mortgage Payment Holiday can leave a negative print on your credit score but lenders are making sure this will not happen in these types of cases. When asking about the payment holidays, it is important that you ask the lender directly and make a record of the response you receive, whilst including the date and name of the person that you are speaking to which will save confusion down the line as different lenders are doing different things.
Remortgaging and Product Transfers at this moment in time have become quite controversial. Lenders have been asking borrowers not to make any unnecessary changes to their mortgages within the holiday period. Therefore, product transfers and Remortgage in Middlesbrough are not allowed at this time.
This would mean that borrowers who are close to finishing their existing product may be forced to move on to the higher lenders variable rate.
However, if many borrowers act too early, there’s a possibility that they might find themselves on a mortgage payment holiday that accrues interest on a more expensive variable rate.
To avoid this, we recommend you seek Mortgage Advice in Middlesbrough from our Mortgage Advisors in Middlesbrough to determine the best course of action. If possible, if you arrange your mortgage transfer first then ask for a holiday then this will be the most sensible way to proceed.
Whilst the Government has advised people to not move house unless absolutely necessary, if contracts have already been exchanged and the process is at the end with all in agreement, then going ahead and completing the purchase will be fine.
You should not pull out of your purchase unless for example, you are worried about losing your job as a result of Coronavirus. We are advising everyone to proceed as normal for now and “wait and see” – you are not committed to completing your purchase until contracts are exchanged.
There are alternative options available to borrowers, with some lenders offering the option of an interest-only to help reduce monthly payments drastically but not adding any further to the loan amount by appeasing the interest payments each month. It may be that you won’t need to convert all your mortgage to interest only and that just putting part of the mortgage on this basis could offer you some form of comfort.
For the borrowers who hold savings, remortgaging into an offset basic could be of some support as this would reduce monthly payments whilst also keeping their savings intact.
An example of offset would be: someone with a £400,000 loan and £100,000 in savings would only pay interest on £300,000 reducing their payments accordingly.
For other borrowers, a straight remortgage to another lender, making note of any early repayment charges, may ease the burden enough financially, or simply extend your mortgage term.
To discuss these options further or gain Mortgage Advice in Middlesbrough for your situation, feel free to get in touch with one of our Mortgage Advisors in Middlesbrough.