Mortgage holiday: Expert issues warning to borrowers as coronavirus pandemic hits Britons
Rishi Sunak announced the temporary measure during a statement this week, with the Chancellor confirming that UK mortgage lenders have agreed to offer three-month “mortgage payment holidays” in a bid to help ease the financial burden of borrowers affected by the coronavirus pandemic. It comes a many fear they could be left unable to work due to suffering from COVID-19, while others worry they could end up losing their job following the impact on the UK economy.
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However, while some may be looking into getting a mortgage holiday, a warning has been issued.
Rob Griffiths, Director at the Mortgage Market Alliance, warned that some people may be approaching the end of a fixed deal, and this could potentially make them eligible for product transfers and the possibility of remortgaging.
“Over the next three to six months, many mortgage borrowers will be coming to the end of their special rates and therefore eligible for product transfers and remortgaging,” he said.
“However, we’ve heard that some lenders are currently not allowing transfers for those existing borrowers who have requested a payment holiday or requesting the borrower makes no change to their mortgage for a period in order to secure the holiday.
“It may well be a temporary situation as lenders get their systems changed but the MMA would like to reiterate that for any borrower in such a situation and wanting a payment holiday or mortgage change, it makes sense to speak to your mortgage adviser first.
“They will be able to recommend the best course of action based on your needs and circumstances, not just now but also in the future.
“We would not wish to see borrowers who need the holiday, then having to move onto the lender’s more costly SVR for a period, because they have not been allowed to product transfer or remortgage.”
Mr Griffiths continued: “As always, borrowers should get the full details from their lender and take them to their adviser before moving to a formal arrangement.”
This week, the Mortgage Advice Bureau has launched a dedicated Mortgage Information Support Service to help homeowners who are worried about their financial situation as a result of the COVID-19 outbreak.
The free support service is available to homeowners nationwide.
Brian Murphy, head of lending at Mortgage Advice Bureau, explained further: “We are living in unprecedented times and some homeowners are rightly worried about their finances.
“With a mortgage typically being a homeowner’s largest outgoing, monthly mortgage payments are naturally going to be homeowners’ biggest concern.
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“We’ve set up the Mortgage Information Support Service to help people through this challenging period and to offer advice to those who need it most.
“The helpline is managed by fully qualified mortgage advisers who can provide guidance about what to do if repaying a mortgage is a worry during the coronavirus outbreak.
“As the situation changes in the UK and across the globe, it’s difficult for people to foresee how their monthly income will be affected, particularly for homeowners on short-term, temporary or zero-hours contracts.
“The government is doing its best to help people during these difficult times and we certainly take financial well-being very seriously, so we are also doing our upmost to support people.
“We hope that the helpline will allow homeowners to talk openly and get them back on track with their finances.”
Elsewhere this week, Chancellor of the Exchequor Rishi Sunak announced an increase to Universal Credit as a temporary measure amid the coronavirus pandemic.
For 12 months, the payment will increase by £1,000 over a year.
Next month, the end to the working-age benefit was set to rise by 1.7 percent in line with inflation, following the end to the benefits freeze – which has seen certain working-age benefits stay at the same level since April 2015.
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