Should I take a payment holiday on my mortgage? Things to consider….
Part of the Government measures announced in response to the current Coronavirus situation was to allow homeowners to take a 3-month payment holiday on their mortgage.
Before you decide to take a break from paying your mortgage, here are some key things to consider:
Has your income reduced or been affected by Coronavirus?
Whilst anyone who has a mortgage may be entitled to take opportunity of the mortgage payment holiday offer, it is important to remember why they this measure has been introduced. The intention is to ease the financial pressures from individuals who have seen their household income reduce and therefore may struggle to afford their usual household finances. Ask yourself if you need to take a payment holiday or if you are taking a payment holiday simply because it is available.
Your future mortgage payments may increase.
It is important to understand that this money does need to be paid back eventually. Many mortgage lenders are recalculating your monthly mortgage payment to spread out the 3-months missed payments over the remainder of your mortgage term. This means your monthly payment may increase after the payment break period. Remember, you will also be paying back more overall as interest will still be charged for the months you do not make a payment.
Do you need to re-mortgage during the next 3 months?
Some lenders are not allowing you to change your mortgage deal whilst you are not making your mortgage payments. It is important to check with your mortgage advisor or lender before applying for your payment holiday if your current deal is coming to an end.
Have you reviewed your other outgoings to see if you can save money elsewhere?
Now is an ideal opportunity to review your other outgoings such as TV/internet subscriptions and utility bills to see if you can get a better deal. Are there any subscriptions you no longer use such as Netflix, gym memberships that you can cancel?
Remember, if you decide that you need to take a payment holiday, it is important to speak to your mortgage lender first. DO NOT just cancel your direct debit.
If you have any questions or would like to discuss the options available to you, we are more than happy to help.
Steven & Laura Lyons
Tel: 01782 450050
*Your home may be repossessed if you do not keep up repayments on your mortgage.