Things to Know as Your Mortgage Holiday Comes to an End

As the three-month mortgage holiday ceases at the end of July,r it is time to resume making mortgage payments or make further arrangements. 

On 20 March 2020, the FCA announced a guidance that allowed homeowners to defer mortgage payments if they were experiencing any financial difficulties during the pandemic.

The guidance urged insurance firms to work with consumers to give them the opportunity to take a mortgage holiday if homeowners were struggling to make mortgage payments, This Is Money reported. 

Mortgage payment breaks are not the only aid that has come just in time for consumers to catch up on financial shortfalls. Payment holidays were also granted for credit card and loan payments, providing much-needed relief to some borrowers.

Approximately 1.8 million borrowers have taken advantage of the mortgage holiday during tough times.

If you are one of many homeowners who have taken the three-month mortgage holiday, you had until the end of July to either resume payments or continue to postpone payments until the end of October. Homeowners who have not yet participated in the mortgage holiday can choose to defer mortgage payments until 31 October 2020.

If a homeowner is able to pay regular payments, it is recommended, because mortgage interest is still accruing. A homeowner with an average mortgage payment could see a rise in charges as much as £1,016, due to the building interest. Those who can pay, should, mortgage lenders advise. 

Homeowners have options, though. According to the FCA’s guidance, firms are required to work with you to arrange a payment schedule that works for you. 

According to the FCA, mortgage firms should work in your best interest to provide adequately considerate care.

The FCA recommends the following:

If You Can Proceed with Regular Mortgage Payments

If you are able to resume mortgage payments after the three-month mortgage holiday is completed, mortgage firms are required to give you relevant repayment information.

You will be given repayment options for the amounts accrued during the mortgage holiday.

Mortgage firms should also attempt to personalise your repayment arrangement based on your current circumstances. 

If You Cannot Proceed with Regular Mortgage Payments 

You are entitled to either pay a portion of your mortgage payment, or lenders can allow another three-month mortgage holiday. If you can afford a portion of your payment, you may arrange to pay what you can afford.

Mortgage lenders will access whether or not an extended mortgage holiday is in your best interest. If the accrued interest amounts will be a greater burden after the holiday is up, then the deferment may not be in the homeowner’s best interest.

Expect that mortgage firms will give sufficient information to homeowners regarding their options. 

Exploring Other Options for Repayment

Navigating this difficult time means doing what you can.

If you are not fully capable of paying your mortgage payment but do not want to take a mortgage holiday, there are a couple of options, according to the Daily Mail.

If you are not able to make a full mortgage payment, consider making interest-only payments to avoid interest pile up later. Banks and mortgage lenders may be able to arrange this with you. 

Second, you could try switching lenders or switching rates with a current lender.

Switching from a variable-rate mortgage to a fixed-rate mortgage can potentially save a couple hundred pounds a month.

Talk with your lender to further explore your options. 

Did you take advantage of the mortgage holiday? Do you think the official mortgage holiday period ending in October will be enough, or do you think it will have to be extended again? Let us know in the comments.

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