We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.
Mortgage holidays have been beneficial for many across the UK who, through no fault of their own, are struggling to keep up with their repayments. The government is slowly winding down its support schemes and from October 31, no one will be able to request a three month break.
This could be problematic for some people who are still struggling financially due to the pandemic.
This could be made even worse considering that mortgage payments are likely to increase following a holiday, given that the interest would have accrued during the break and will be added on once repayments start.
Because of these factors, some mortgage holders may struggle with their repayments as 2021 rolls around.
Fortunately, if a person falls into arrears, their lender should be in touch to help talk through the options.
There are also certain things that a lender must do when a person falls into arears within 15 days according to the Money Advice Service.
- Inform the holder of the total sum of the arrears
- List all the payments that have been missed
- Tell the holder the exact amount outstanding under their mortgage
- Give the holder a reasonable time to make good any shortfall in payments
- Tell the holder the amount of any charges incurred because of missed payments
Mortgage: Leaseholds likely to be affected as freehold costs skyrocket [INSIGHT]
Recession warning: Mortgage holders face ‘mixed’ future as GDP drops [WARNING]
Martin Lewis warning: Bank account ‘danger debt’ to emerge [EXPERT]
It should also be noted that a lender must not seek repossession unless all reasonable attempts have been made to resolve the situation.
Additionally, lenders must also give the holders reasonable notice before taking any action.
The Money Advice Service detail that the best first step to take for people in this position is to pay back what can be afforded when discussing options with a lender.
They detail that mortgage holders may be surprised with how simple it is to come to an agreement with a lender to reduce monthly repayments and get back on track.
Of course, there is still time before mortgage holders will have no choice but to address their potential arrears.
Under the current rules, mortgage holidays can be requested up until October 31, potentially meaning that some people could halt their payments into January 2021.
They will need to be requested by contacting the lender directly and holders should not simply stop paying their mortgage.
Unpaid interest will likely be added to the long-term debt but there won’t be any additional fees or charges levied.
If the lender agrees to a mortgage holiday, they will likely outline what some of the repayment options are once the break is over.
This can include:
- Spreading the deferred payments over the outstanding term of the mortgage
- Increasing the length of the mortgage term
- Making interest or capital only payments
Source: Read Full Article