Worried about your mortgage AFTER your mortgage holiday? Here's what you need to know

If you're on a mortgage holiday, you can still get a product transfer. Find out what it is and how to apply

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Home owners who have taken a mortgage holiday and are coming up to the end of their fixed term offer will be approached by their lenders with product transfer offers, Finance UK have announced.

The news will come as a relief to the many homeowners – one in seven, by some estimates – who are currently on mortgage holiday and are worried about what will happen to their mortgages after the holiday ends. 

A product transfer allows a mortgage holder to move on to a new fixed term deal with their current lender without the need to either remortgage or go onto their standard variable rate. Product transfers are beneficial – especially under current conditions – in several ways: they typically don't involve a full new evaluation or hard credit checks, and they come with far fewer fees than a remortgage.

The catch is usually that they're not available to a homeowner currently on a mortgage holiday, or a homeowner who has extended the term of their mortgage or asked for an additional loan. However, in recognition of the exceptional circumstances brought about by Covid-19, UK lenders have vowed to offer product transfers even to customers who have taken a mortgage holiday. 

This will be particularly good news if your financial circumstances have changed because of Covid-19 and you are worried that you may not be able to remortgage. You may even be offered a better rate by your lender – although that's not a guarantee. 

If you're on a mortgage holiday and you've asked your lender to extend your mortgage term to cover the delayed repayments, it's still worth speaking to them, even though this move would normally disqualify you from a product transfer.

This news should come as food for thought for anyone who is considering going on a mortgage holiday while still able to pay their mortgage. There is evidence that some home owners have taken the mortgage holiday option when it wasn't necessarily the best one for their circumstances. Always speak to your lender first: you may find that there are better longer term solutions.

Not currently on a mortgage holiday and wondering whether you should take a product transfer or remortgage? Our advice is: shop around for a good mortgage deal first. We've teamed up with the online mortgage expert Habito; use their free mortgage comparison tool before to see how much you could borrow.