And here’s what happened…
At the moment, our priority is everyone keeping safe at home or wherever they are, but I also wanted to help address any financial worries that might come up through this difficult time. I am working on another post on small things we can do to try and help financially going forward in this unsettling time but for now, I wanted to write about the mortgage payment holidays being offered by mortgage lenders. We just took a 3 month holiday from ours.
I also have to add that this should not be taken as financial advice, I am not a financial correspondent but am relaying information as I have researched and as I understand it.
This morning, we had a family meeting about our outgoings both at home and work-wise for the next few months. Whilst we accept we are hugely privileged – we have a roof over our head, and to even have access to a mortgage is a blessing in itself, but we also have to face a few realities over our financial situation (we were already at capacity with our renovation work) and see how we can potentially alleviate any pressure if we do not get work for the next three months (which at the moment, is looking likely).
A mortgage payment holiday has been announced by most mortgage lenders (not all) and at the moment it is for 3 months (but this may vary as well). *EDIT* the mortgage holiday has been extended as of 22/05/20 – read more here). I did not realise that this is something that can be accessed usually, but often higher proof of your situation would be necessary, however, during the coronavirus pandemic, it seems restrictions are far less. But it’s important to remember that not everyone will be approved.
It is also important to understand the term ‘holiday’, the bank will not pay your mortgage, you will still rack up interest on your payments, but it will be added to your next payments when you start paying again. Basically, you will be paying a higher rate when you start repaying it, especially if you are on a fixed rate. It is definitely worth considering whether this is right for your circumstance.
You won’t be able to take the mortgage payment holiday if you are already in mortgage arrears, but they do currently seem to be applicable for buy-to-let mortgages (which could help alleviate renters).
For us, we are currently on a variable mortgage so with the base rate being lowered, the amount we will pay back when we do will actually be less than we’re paying now (but obviously, there are risks with being on a variable mortgage, too). Under these circumstances, an individual’s credit rating should not be affected – usually, mortgage arrears would affect your credit score but with this situation, it won’t be affected (but obviously confirm this with your bank individually) – please see further information here, and just to remind you, I am not a financial advisor, obvs.
We called this morning (as we couldn’t seem to register online – we have an apostrophe in our family name which seems to prove difficult for the internet!) and we got through fairly quickly. Our mortgage lender, Nationwide, asked us a few questions about our eligibility but nothing probing – the fact that we work for ourselves, don’t get sick pay, have no jobs currently coming in and a child permanently at home for the foreseeable seemed to be a satisfactory answer. By the end of the phone call, all had been sorted, we were told not to cancel our direct debit, it would simply not be withdrawn from April 2020 and our next payment will come out in July 2020. They were happy to discuss rates and payment terms over the phone, but obviously it is so important to do your own research, your own bank’s criteria and rates, too, and it’s also worth thinking about whether you can afford the potential higher payments later down the line. Our bank told us they would write to us outlining all new payments going forward.
For us, it took 20 minutes.
I keep seeing articles online saying that people are waiting for hours to try and sort their mortgage holidays but this wasn’t the case for us at all, so please don’t let that put you off. For most, you can also apply online, so if you can, do take advantage of that (whilst the internet is still working for us all!).
I hope everyone is well and if any of my posts can help people to worry less about financial woes amidst a time of uncertainty, then I hope you find them useful. I am also sorry I cannot offer many more solutions for those in rental properties currently, I know that the government has pushed through emergency legislation which suspends new evictions during this time (see more info here) – I would follow Vicky Spratt on Instagram who is writing and campaigning for the current situation amongst renters.