Millions of UK home owners affected by Covid-19 are taking advantage of the government-mandated three-month mortgage holiday. However, statistical data by credit score agencies is revealing a troubling trend: up to a quarter of home owners aren't using the correct procedure for agreeing a mortgage holidays with the lender; instead, they are simply cancelling their direct debits without any prior communication with their lender.
It is true that both mortgage lenders and credit agencies have been made aware of the Covid-19 situation, and that for many homeowners who suddenly find themselves strapped for the cash the mortgage holiday is a matter of urgency. As such, applying for a mortgage holiday specifically because you've been affected by coronavirus will not affect your credit score.
However, home owners have been warned that this only applies if they go through the proper channels to get their lender's agreement to the mortgage holiday. This can be as simple as a phone call, but the request can also be made in writing, or, in the case of some lenders, online.
Even in urgent cases, the mortgage holiday will take up to a week to get approved, and you must not stop paying your mortgage before you have the approval in writing (email is fine) from your lender. For this reason, it's very important to think ahead: make sure you're able to pay at least one more month before going on the mortgage holiday in case processing times mean your payment date will be before.
Also, remember: a mortgage holiday is not free and the repayments will have to be made at some point. In some cases, it might make more sense to remortgage. We've teamed up with online mortgage specialist Habito – use their free online tool below to see whether you could remortgage.
- Want to know more about mortgage holidays more generally? Read our guide – it covers non-coronavirus-related mortgage holidays, too.