Discover the impact of the Coronavirus and your mortgage
Sick of lockdown yet? Well, you’re not alone, but being stuck indoors isn’t the only problem that the latest round of social isolation has created. Indeed, many people are worried about their jobs and finances. In particular, their ability to secure or keep up with their mortgage payments is a subject on many people’s minds, right now. Fortunately, you can make sure you are better informed on this subject, and the help you can access by reading the post below.
The good news
It’s not all doom and gloom when it comes to the impact of coronavirus on mortgages. Indeed, as interest rates have been slashed to 0.1%, with some people with variable-rate mortgages will have to pay less for the foreseeable future.
Also, some people may find they can offset reductions in wages against savings they are making elsewhere. After all, many of us are spending less money on things such as holidays and going out for meals. Something that can help us to stay on top of our mortgage at this financially challenging time. So if you can afford to overpay then it is worth doing this to build up a reserve so that should you need to take a payment holiday in the future, your break comes from this reserve.
Struggling to pay your mortgage?
However, because of reduced hours or job loss, some people are feeling the financial pinch of Corona. The good news here is that the UK Government is currently offering a 3 month payment holiday. Yes, that is a whole 3 months (or 6 months extended period) where you won’t have to make any mortgage payments at all. Sounds good doesn’t it? Well, it is in principle. Although, some lenders may record this break as a missed payment on your credit report, something that could mean higher interest rates and problems getting credit in the future.
Should you take a mortgage payment holiday?
The answer is, of course, yes if you are genuinely struggling to make your payments because of coronavirus related issues. However, financial experts are advising that you think long and hard before you choose to take a mortgage payment holiday for several reasons.
The first is that the 3 month payment holiday isn’t free money. That is your debt isn’t cancelled for those three months. Instead it is added to the total sum that you owe. This means it is quite likely that your monthly repayment amount will go up if you choose to take the holiday. Something that could affect your ability to make these payments in the future.
The next reason is that no one really knows how long this payment holiday option will be around. Of course, that can mean people are more likely to take the opportunity before it disappears. However, suppose people that don’t genuinely need it do take it. In that case, it will place undue strain on the initiative and will cause it to be revoked sooner. Something that means people in dire need may not be able to access this support. What that means is unless you are really struggling to pay your mortgage, it’s best if you don’t take your payment holiday now.
How to apply for a mortgage payment holiday?
Before you take any action, it’s best to get some expert, impartial mortgage advice from someone that understands the market. The good news is that by using a whole market broker, you can be sure that there will be no broker fee. After all, if money is already a concern, you won’t want to add any additional fees to the process.
Also, if you wish to go ahead with a mortgage payment holiday, you will need to contact your lender before 31 Jan 21. Therefore you must seek out impartial mortgage advice as soon as possible.
Looking for a mortgage?
COVID-19 is also affecting those looking to secure mortgage products as well. In particular, the affordability criteria is shifting with bonuses, commission, and overtime no longer being accounted for and lenders changing their lending criteria regularly.
Additionally, quite recently, some lenders are no longer accepting income from the Job Retention Scheme (Furlough). This is a situation that is likely to get worse when they bring in the even less generous Job Support Scheme. Something that means securing a new mortgage or remortgaging could get trickier in the future, so if you are looking for a mortgage working with someone like us can be a real benefit for you – we don’t charge you a broker fee and we have access to the whole of the mortgage market. As Mortgage Brokers we talk to all of the lenders on a regular basis, which means we know and understand who may have different lending criteria to another lender – meaning you get access to great advice and support.
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