Lockdown: Mortgages Q&A for homebuyers and homeowners

As we head into a second national lockdown, homebuyers and homeowners are likely to have many questions or worries about what support may be available to them if needed. We have compiled a list of the most frequently asked questions.

If you are worried about your financial situation, make an appointment to speak to a Linear financial adviser. Initial consultations are free, can be conducted safely at your convenience by phone or video platform, and are without any obligation on your part.

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Q. Will mortgage payment holidays be extended?

This guidance is correct as of 6 November 2020, however, like many aspects of current life, it may be subject to change as the government develops its policy position for the upcoming November lockdown, and during it. We will endeavour to update this article as changes are announced.

The mortgage payment holiday scheme was due to come to an end on 31 October 2020. However, borrowers who have not yet asked for a mortgage deferral period can request to pause repayments for a maximum of six months.

Those who have already had their mortgage payments deferred may extend their mortgage payment holiday until they reach the six-month limit.

If you have already reached a six-month limit, you will not be able to apply for another mortgage holiday extension. However if you are still struggling to pay, it is really important to maintain dialogue with your lender, You should also consider speaking to a Linear mortgage adviser to help guide you through what may be possible – there may be options such as “tailored support” based on your individual circumstances.

Remember, if you are thinking about taking up any offer of a mortgage payment holiday, interest will still accrue on what you owe, so keep that in mind and seek advice from an independent adviser on the potential financial consequences, before asking your lender to process any payment holiday request.

If a mortgage payment holiday is taken up, it is strongly recommended that as soon as financially viable, you should start your mortgage repayments again.

Q. Will a mortgage holiday affect my credit file?

Any help you receive from 1 November 2020 will be recorded on your credit file.

Any payment deferral taken under the June guidance up to 31 October 2020 will not be reflected on your credit file.

Q. I have been furloughed this year. Will that affect my chances of securing a mortgage?

Many lenders have changed their criteria to require submissions to identify if you have been furloughed. Some lenders may not be able to offer you the mortgage you want currently if this is the case. In other scenarios, the lender may only recognise 80% of the support you received as income – which in turn will affect (limit) the amount you can borrow.

A Linear mortgage adviser who works independently on your behalf will be able to fully assess your financial situation and advise you how lenders are likely to treat your application, before you commit to applying for any mortgage.

Your property may be repossessed if you do not keep up payments on your mortgage.

Linear usually charges a fee for mortgage advice. The precise amount will depend on your circumstances but may range from £399 to £599 up to a maximum of 1% of the mortgage amount. The fee is payable when an application is submitted to a mortgage lender and is non-refundable.

Kylie-Ann Gatecliffe
Kylie-Ann GatecliffeKAG Financial Ltd