With the coronavirus continuing to have an effect on people’s health and livelihood it is reassuring to note that mortgage lenders have stepped up to do their bit.
As part of the measures unveiled by the Chancellor, Rishi Sunak, banks have agreed to allow a three-month payment holiday for those who have been hit by the pandemic. This should help to ease the burden on struggling homeowners at a difficult time
Linear adviser Mark O’Neill answers the essential questions:
How do ‘payment holidays’ work?
The mortgage repayment is deferred for a period of 3 months. The monthly payment changes to zero, and interest accrues for the period. Where repayments are deferred for a time, the borrower will need to make up these repayments in the future, usually over the remaining term. It is not a long-term solution but can be particularly appropriate where there is a temporary shortfall of income.
Will I be offered a payment holiday automatically?
There are no plans at this stage for this to happen. Of course, this could change in future, as has already happened in Italy.
Will it affect my credit file?
Ordinarily, failing to make a mortgage payment would put your mortgage account in arrears and would have an impact on your credit file. Over the last 24-hours several of the big lenders such as Lloyds, Natwest and Nationwide have confirmed that anyone granted a payment holiday will not see a negative impact on their credit file. We anticipate others will follow suit with similar announcements.
Will I automatically get a payment holiday if I want one?
Not necessarily, there will be an assessment based on individual circumstances by the lender. By and large it looks as if anyone who has a genuine coronavirus related reason will get one though.
Payment holidays are not always in the best interests of everyone and sometimes there are other more suitable solutions. If you are thinking a payment holiday might be right for you contact your Linear adviser who will help with the process.
What else can Linear do to help?
Sound financial planning has always been at the heart of what we do. As part of your relationship with Linear many of you will have protection in place that’s worth remembering at this time. From life insurance through policies set up that provide income for you if you are unable to work through ill health; protection in place that helps out if you are made redundant, plus access to medical professionals and care and support services through agencies such as Bupa and Redarc. It’s a fact that many people tend to forget the details of what is built into their financial safety net.
As part of your planning to protect you and your family from the effects of Coronavirus now is the perfect time to review that safety net with your adviser. Call or email your Linear adviser to discuss any of the issues in this statement.