Posted on Jun 16, 2020
Before June the 4th, taking a mortgage payment holiday meant that your monthly repayments would be paused for a fixed amount of time of up to three months. This benefit serves to offer those facing financial difficulties over the pandemic some breathing space and to help manage your finances during this time without needing to worry about some of your more significant outgoings. If you’re yet to request a payment holiday, you are able to do so up until the 31st October.
On June 2nd, the Financial Conduct Authority announced that they would be offering further support to borrowers due to the ongoing economical impact of COVID-19. This means that homeowners who are currently taking a fixed payment holiday will now be able to apply for an extension of a further 3 months if you’re still facing financial difficulties.
Who can take a mortgage payment holiday?
This option is available to all homeowners and buy-to-let landlords who are up to date on their mortgage repayments. You don’t need to have contracted the virus to be eligible for the payment holiday, this option is available to anyone eligible if you’re concerned that you may struggle to meet your mortgage repayments during these testing times.
You will not need to undergo any affordability tests, you simply need to self-certify that you or your tenant’s income has been affected by the coronavirus, either directly or indirectly.
How do I apply for a mortgage payment holiday?
To apply for a mortgage payment holiday, you need to contact your lender – you should be able to do this online or over the phone. It’s worth talking through all the options available at this point as you might find that moving your mortgage to interest-only payments for a fixed period might be preferable or extending the term of your mortgage. It’s important at this stage that you don’t cancel your monthly direct debit as this will then be considered as a missed payment and will impact your credit score.
If you need to apply for an extension on your existing mortgage payment holiday, your lender should contact you to discuss your circumstances and whether they have changed. They will then work with you to agree an affordable way for you to make up the deferred payments or discuss your other options with you, including the option to extend your payment holiday by a further 3 months.
Does applying for a mortgage payment holiday affect my credit score?
No, a number of leading credit reference agencies have confirmed that a homeowners’ credit score will be protected when they take out a payment holiday. To do this, they have introduced an ‘emergency payment freeze’ which will ensure your credit score is maintained at its current level over this period.
If you find that your credit score has been affected, it’s important to raise this to your lender and they should amend this for you. You can also raise a dispute with the credit reference agency.
However, this doesn’t mean that your payment holiday will not play a factor in a lender’s decision making in the future. The fact you took a payment holiday will be taken into account in future affordability assessments, so it is worth taking this into consideration before taking one.
What are the disadvantages of taking a mortgage payment holiday?
As well as playing a part in future affordability assessments, taking a mortgage payment holiday will also mean that you will pay more in interest on your mortgage which means it will cost you more than it would have previously to pay it off. With this in mind, taking a mortgage payment holiday should be reserved only for those who really need it.
Can I take a payment holiday on my Home Insurance?
Most mortgages make insurance a mandatory part of its terms and conditions, which means you simply cannot just cancel your Home Insurance if you’re struggling. With that being said, some insurers are offering policyholders the option to take a payment holiday on their insurance which remaining covered over that period of time.
To discuss your options with your individual Home Insurance policy, just get in touch with Watkin Davies on 02920 626226.
"Very efficient, always friendly and helpful. I have used Watkin Davies for years, and they have always been competitive. I received great support recently when I had to make a claim, so I'd highly recommend them."
"I was very impressed with the quality of the service - it was outstanding. The advisor, Ms Spear went above and beyond to give me the best driving insurance policy. The policy I have received is exactly what I was looking for. Thank you so much Ms Spear!"
"I've used Instructorcover Plus for my driving instructor insurance for a number of years. Not only are prices competitive, even at renewal, but customer service is fantastic. Call operators are always cheerful and incredibly helpful. Everything is always sorted in a single call, saving valuable time. Highly recommend."
"Absolutely superb service from the team, particularly Natalie. Very easy and simple process"
"As aways very efficient"
"I have used InstructorcoverPlus for my driving tuition insurance for a number of years. Their prices are always competitive and everyone I speak to is friendly and helpful."
"Ceri was very helpful and knowledgeable on the phone"
"Karrie Brewer was so helpful today, especially as one insurance company would not quote, so had to shop around for us, many thanks"
"Kelly is amazing. Very helpful and friendly, did a great job today with helping me out to get insured. Amazing service!"
"Great service. Got my first driving instructor insurance with this firm. Price was competitive and customer service provided by Jane was great. I will definitely recommend the service."
"Team were very helpful when it came time to renew my policy, taking the time to check and make any amendments needed. Would highly recommend."
"5 stars!"
"Excellent service from Watkin Davies as per usual. I love the way they do all the hard work researching best quotes and provide you with your options. All the staff are very friendly and professional, I have to highlight Ceri who always does a fantastic job for me and my family."
"Really helpful and efficient customer service, friendly and knowledgeable too. I would highly recommend InstructorcoverPlus."
"I m a returning customer and what a wonderful experience. Emma is new to her role but she was very helpful and polite throughout. She got the quote done very quickly and managed to beat all my other quotations. I therefore didn't have to waste any more time. Further she offered me three instalments at 0% which is helpful in this current economic climate. The paperwork was sent straight away. Highly recommended."
"Once again, could not have been more helpful! Still a pleasure to speak to a 'real person' who knew what they were talking about!"