Millions of UK home owners affected by coronavirus are taking advantage of the government-mandated three-month mortgage holiday. Yet there is some confusion about what mortgage holidays are and how to apply for one correctly.
Yes, there is a right and a wrong way of going about taking a mortgage holiday. Although many home owners in need of a mortgage break are struggling financially, and lenders have been asked to be understanding, it's still important to communicate your situation to your lender before you stop paying.
- Find out more mortgage holidays in our guide – it covers non-coronavirus-related mortgage holidays, too
Reports from credit agencies have surfaced, suggesting that many UK home owners haven't correctly understood the mortgage holiday process, with up to a quarter having just cancelled their direct debit. It's very important not to do this to avoid a bad credit rating – and a bad relationship with your lender. Call them or write an email first, and well before your next payment is due.
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.
Another common misunderstanding about mortgage holidays is that the repayments are simply written off. They are not and will need to be repaid at a later date. How this will be done depends on your lender, but the online mortgage specialist Habito have developed a mortgage calculator tool specifically designed to help you work out how your future loan will be affected by a mortgage holiday. Use it below to help work out the figures.