Mortgage holders whose finances have been impacted by coronavirus can now extend their mortgage payment holiday by a further three months.
Banks and building societies have agreed to extend the period during which customers do not need to make mortgage repayments beyond the initial three-month deadline.
Lenders will work with borrowers who are struggling to meet their repayments to find the best solution for them.
This includes extending the payment holiday, agreeing reduced payments, switching them to an interest-only mortgage and extending the mortgage term.
hey have also agreed not to proceed with involuntary repossessions for both residential and buy-to-let mortgage customers until October 31 2020.
The news comes as the mortgage trade body UK Finance said that 1.82 million mortgages (the equivalent of one in six home loans), are now covered by the payment holiday.
Stephen Jones, chief executive of UK Finance, said:
“Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs.”
How does a mortgage payment holiday work?
Customers whose finances have been impacted by coronavirus are allowed to take time off making mortgage repayments.
The original payment holiday was announced on 17 March and lasted for three months, but the term has now been extended by a further three months where appropriate.
But the mortgage payments are only deferred, and the interest that would have been paid is added to the outstanding debt owed.
The missed payments will need to be made up at some point in the future.
What other options are available?
Lenders have agreed to work with borrowers to find the best solution for them.
This may be a payment holiday, or they may look at other options that could better suit their circumstances.
For example, they may agree to accept reduced payments for a period of time, switch them to an interest-only mortgage, or extend their mortgage term. This would also lead to reduced monthly repayments.
But despite this flexibility, UK Finance has urged people who can afford to keep up with or resume their mortgage payments to do so.
How do I apply for a payment holiday?
If you want to apply for a mortgage holiday, go to your lender’s website and follow the link on coronavirus.
Many lenders have set up an online application process after being inundated with requests in the early days of the scheme.
If you want to take a different option, such as switching to an interest-only mortgage, you should contact your lender directly.