How to apply for a three month mortgage holiday if you're struggling due to coronavirus

THE Government have announced a further three month mortgage extension for homeowners.

HM Treasury hopes the decision will help lenders with more flexibility to help customers in financial difficulties amid the coronavirus pandemic.

UK Finance, which represents the banking industry, said: “Under usual circumstances, the lender would have to assess the customer’s finances and consider what forbearance options may be the most suitable.

“This is being waived to allow firms to implement a more straightforward process in an otherwise stressful time.”

What do I do if I can’t make my monthly mortgagee payment?

The first thing to do is to contact your lender.

Many of the major banks now have information on their websites about people who have been affected by loss of earnings due to the coronavirus, either directly or indirectly.

The pages include information about who to call.

You can find the Barclay's page here, the NatWest one here, and the Santander one here, for example.

It is important you do this as soon as you think you have a problem.

What information do I need?

Your lender will want to review your account before agreeing anything, so you will need your account or customer number to hand.

If you have your last annual statement available that might also help, or information about your monthly payments.

It may also help to have worked out a realistic monthly budget, so you know how much you could afford to pay.

What options can my lender offer me?

If your lender can offer a mortgage holiday, you won’t pay anything for up to three months.

They may offer you other alternatives, such as changing your mortgage to pay a smaller amount each month.

A mortgage holiday may not be the best option if your circumstances are unlikely to change, for example, as your payments will return to normal after the three months are up.

The interest you should have paid will also be added to the total which you owe and will need to be paid later – it does not get wiped off your account.

The borrower will also need to make up the missed repayments in the future, which could be over the remaining term of the mortgage.

If this is the case, then your monthly repayments will be slightly higher than before if you want to pay off the mortgage in the same time.

The best thing to do is check carefully with your lender about how it will work.

You can also use this online calculator from financial planner Moneyed to work out how it might change your payments.


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What are my other options?

If a mortgage payment holiday isn’t for you, speak to a mortgage broker or your bank, which may be able to transfer you onto a better deal.

A spokesperson for L&Q, which brokers mortgages, said: “There are rates available below 1.5 per cent – so there is no need to be paying too much.”

You may also be able to change to just paying the interest on your mortgage, rather than paying off the full amount.

Has the mortgage holiday been extended?

Yes, HM Treasury have announced an extension to the payment freeze, lasting into October.

The Government says homeowners will now have until October 31 to ask for a three month freeze (not a six month freeze) if they've not taken one up already.

Also on the cards are plans for lenders to offer lower repayments instead of a complete payment freeze.

Meanwhile the current ban on properties being repossessed will continue until October 31.

Christopher Woolard, interim chief executive at the FCA, added: “Our expectations are clear – anyone who continues to need help should get help from their lender.

"We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.”

Will taking a mortgage holiday affect my credit score?

Credit ratings agencies have said they would record the payment holidays but it wouldn't affect your credit score.

UK Finance said: “Firms will make efforts to ensure that forbearance offered under these circumstances will not result in an adverse impact on the customer’s credit score.”

If you go into arrears they will almost certainly be reported.

What are the lenders saying?

We’ve asked a number of the major banks for a comment on their position.

Santander said: “Santander is fully supportive of the industry wide three-month payment holiday to support mortgage customers that have been impacted by Covid 19.

“Customers who know that they will be unable to make a mortgage payment within the next 30 days should contact us now to discuss their options.”

It is also ensuring that customers’ credit files are not negatively affected as a result of the payment suspension.

NatWest and RBS had already announced plans to help customers last week.

Any of their customers in financial trouble thanks to the virus – whether they have it or have seen their earnings hit because of it – could qualify for a break from mortgage payments.

There are no fixed rules for the scheme – instead it will be considered on a case-by-case basis.

An RBS spokesperson said: "We understand that there may be circumstances where a personal customer may fall into financial difficulty as a result of the impacts of Coronavirus, for instance, loss of income.

"We will look to understand each customer’s situation on a case-by-case basis and can offer a number of options to help them manage their finances.

"We would encourage any customer experiencing financial difficulty to get in touch with us."

A Barclays spokesperson said: "As a responsible lender, it is crucial that we offer the right support to our customers at this time.

"We have therefore decided to offer customers who are potentially facing financial difficulty, a number of options to support them through this time.

"These include repayment holidays for up to 90 days and switching from capital repayment to interest only for up to 12 months.

"We encourage customers to get in contact with us at the earliest opportunity to discuss the most suitable solution.”

We will update other lenders' positions as we have them.

Here's some more information about what to do if you lose your job due to coronavirus.

And here are your rights to sick pay if you have to self-isolate.


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