Mortgage payment holidays have proved a vital lifeline for homeowners struggling financially due to the COVID-19 crisis, according to online mortgage broker Trussle.
However, following the Financial Conduct Authority’s (FCA) statement that mortgage payment holidays will not extend past 31 October, and further financial supports after that point will affect borrowers’ credit files, Trussle has urged homeowners to use caution with this support system.
Miles Robinson, head of mortgages at Trussle, said: “It’s clear that mortgage payment holidays have proved a vital lifeline for some homeowners who have suffered financially as a result of the coronavirus pandemic.
SmartSearch: FCA must use full weight to combat fraud
“It’s important to know that unlike before, if you need financial support from your lender after 31 October, it will be marked on your credit file.
“We’d urge homeowners to only utilise the mortgage payment holiday if it’s essential.”
Robinson also highlighted that once a homeowner’s mortgage payment holiday reaches its end, their monthly payments will increase as a result of additional interest being added to the total mortgage balance.
Meanwhile some lenders offer other viable alternatives; this includes switching some of the loan amount to interest-only payments in the short-term.
Miles Robinson, head of mortgages at Trussle, said: “For existing homeowners, now could also be a good time to think about remortgaging.
“Our customers save £334 on average per month by remortgaging onto a fixed rate, so it is worth using a remortgage calculator to see if switching could save you money.
“Any aspiring or existing homeowners who are considering taking a mortgage payment holiday should seek professional advice as soon as possible to discuss their options.”