Shocking figures reveal 1 in 9 given mortgage holidays by banks – how to apply and work out how much extra it will cost
MORE than 1.2million mortgage payment holidays have been offered to households impacted by coronavirus.
That's around one in nine mortgages, according to shocking new figures published today by banking trade body UK Finance.
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It says around 61,000 mortgage payment holidays a day were granted in the two weeks between March 25 and April 8.
Chancellor Rishi Sunak had promised three-month payment breaks to mortgage borrowers on March 17.
But how do you apply for mortgage holidays, and how do you work out how much more they'll cost you?
We explain below.
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What is a mortgage repayment holiday?
Mortgage payment holidays sees lenders freeze payments for up to three months.
This could mean you don't have to pay any interest for three months if you have an interest-only mortgage, or it could mean you don't pay any interest or capital repayments for three months.
UK Finance says this would mean payment holidays of £260 a month for interest-only mortgages based on the UK's average mortgage loan size of £132,128, or £775 a month for a repayment mortgage (including interest).
How much will a mortgage payment holiday cost me?
Taking a repayment holiday doesn't, however, mean these payments will be wiped.
You'll continue to be charged interest during the payment holiday unless your lender has told you otherwise.
The cost of the deferred payments and interest accrued will then typically be spread across the remaining term of the mortgage.
This will add just over £9 a month onto the cost of the average mortgage.
Your lender will tell you what you'll pay, but if you want some guidance beforehand, MoneySuperMarket has created a handy mortgage payment holiday calculator.
How do I apply for a mortgage repayment holiday?
If you use MoneySuperMarket's calculator to first work out what your repayment will be as a result of a mortgage holiday, you'll be taken directly to your lender's mortgage repayment holiday information to begin an application process.
If you don't use the calculator, visit your bank's website for the latest information.
Most have online forms you simply need to complete.
You don’t need to provide any documentation; you will just need to self-certify that your income has been either directly or indirectly impacted by COVID-19.
But UK Finance warns that to be eligible for a payment holiday you will need to be up to date on your mortgage payments.
If you're not, contact your bank to see what help it can offer you instead.
Will a mortgage holiday affect my credit score?
No. The UK's three credit reference agencies - Experian, Equifax, and TransUnion - have confirmed that mortgage repayment holidays taken as a result of coronavirus won't impact your score.
That said, cancel your mortgage direct debit without first agreeing it with your bank and this will likely be passed on and could damage your credit score.
What other mortgage help is available?
Other help for mortgage borrowers includes lenders being banned from repossessing homes for three months.
And lenders offering customers who have exchanged contracts for a house purchase the option to extend their mortgage offer for up to three months to enable them to move at a later date.
More on coronavirus
Stephen Jones, UK Finance chief executive, said: “We understand that the current crisis is having a significant impact on household finances for people across the country.
"Lenders have a number of options available to help, and payment holidays aren’t always the right solution for everyone.
"We would therefore encourage any mortgage customers concerned about their financial situation to check with their lender so they can find out more information on the support available and how to apply.”