- 4th April 2020
- Posted by: Mark
- Category: advice
The short answer is yes. The 3 month payments still need to be repaid and for a £200k mortgage you may see an increase anywhere from around £12-15 per month once you resume payments. If you are not furloughed and are currently working as you normally would be, some banks may refuse you the 3 month mortgage payment holiday.
It’s Not Free Money
The government introduced the recommendation because many at this time cannot work, therefore cannot realistically afford to pay their mortgage with no income. It’s not free money though, your repayments will go up slightly after the 3 month period passes. How much your repayments will go up will depend on the rate of interest you are currently paying.
The aim of the government it would seem is that after 3 months there is a plan which will allow people to go back to work while still keeping control of the outbreak. Modelling suggests the lock down will last a few weeks which does tie in with the 3 month period.
If I am Still Working Can I Still Apply For The Mortgage Payment Holiday
If you are currently working and are not furloughed your bank may not offer you a break in payments. This will vary from bank to bank and individual circumstances. For example if both joint mortgage holders are working it’s unlikely they will approve the repayment break. However if one is working and the other is not it’s likely the bank would approve it.
Ask if Your Lender Can Switch To An Interest Only Deal For a Year
It may be possible to switch your mortgage temporarily to an interest only for 12 months. This would lower your repayment for a year. Even though you would not be able to take advantage of the mortgage payment holiday, over the course of 12 months your repayments would likely be less than half your existing repayments.
You would need to discuss this option with your lender. Barclays seem to be suggesting this as an alternative route for some.