With the coronavirus crisis having a huge impact on business and household incomes around the country, banks in the UK are offering customers the chance to take a three month mortgage holiday.
The government made the announcement in its coronavirus package earlier this week (Tuesday, March 17), with Chancellor Rishi Sunak confirming a raft of measures to help families and businesses struggling because of the COVID-19 outbreak.
What is a mortgage holiday?
Homeowners are able to ask for a three month payment holiday, meaning no mortgage payments at all for the agreed period.
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It’s not seen as a solution for the long term, but rather, a means to mitigate a temporary drop in income.
UK Finance, trade body for the major banks, said: “This is not a solution where, because of a permanent reduction in income, a borrower is unable to afford anywhere near the full mortgage repayments and there is little prospect of an improvement in the situation in the foreseeable future.”
Who is eligible for a mortgage holiday, and how do I apply?
Not everyone will be given a payment holiday on their mortgage and banks will be likely to decide whether or not to grant them on a case-by-case basis.
According to UK Finance: “Firms will help customers the best way for the individual, but an automatic payment holiday may not always be the most suitable approach and may not be required by all customers.”
To apply, just call your bank or, if possible and not putting others at risk of COVID-19, visit your local branch.
Will a mortgage holiday because of coronavirus affect my credit score?
It’s natural for homeowners to worry that asking for a three month payment holiday will negatively impact their credit scores, potentially harming their ability to take out loans or credit cards in the future.
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But UK Finance has insisted that it’s not something households have to worry about.
“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,” the trade body said.
As of Wednesday (March 18) afternoon, 71 people in the UK had died from COVID-19, with the global death toll at more than 8,000.
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