Banking and Finance Update – Coronavirus Mortgage Holidays
It was announced on 17 March 2020 by the Chancellor Rishi Sunak that mortgage support in the way of up to 3 month payment holidays would be available for households that have been affected by coronavirus. The announcement was made as part of a government package designed to help the economy during the coronavirus crisis.
There will be a fast-track system for approval, but not everyone will be granted a payment holiday. The unpaid interest will still be recovered later, but individual credit ratings will not be affected.
It is important to note that holidays will not constitute free money. The banks have said they remain obliged under Financial Conduct Authority rules to ensure that any “forbearance” will still assume an eventual full repayment of arrears.
While a person is taking a payment holiday, the interest that would have been paid will still rack up, and the capital sum of the loan remains. This means the monthly direct debit will be increased to cover the amount added once you resume your payments.
This follows last week’s announcement that the Bank of England cut interest rates to 0.25% in a bid to reduce the economic impact of coronavirus. If you are on a tracker mortgage, this cut should start impacting your repayments immediately.
What should I do?
If you are worried you may be unable to pay your mortgage because of restrictions in place due to coronavirus the first step is to contact your lender, they will be able to answer your questions in more detail and help you find alternatives, if necessary. If you are concerned about the long term implications of taking a mortgage holiday, ask them specific questions on what this will mean for your payments, the length of your mortgage term and how it might appear on your credit file.
How Can Ellis Jones Assist You?
Our specialist Banking and Finance Litigation team has substantial experience in dealing with claims against Banks and other financial institutions, and we have recovered in excess of £55 million for our clients since 2012. We can assist you by advising upon, and subsequently progressing, a claim or complaint to recover your losses.
If you believe you may have been mis-sold a Mortgage, or wish to seek advice on mortgage payments or holidays please do not hesitate to contact William Fox Bregman or Kirsty Handyside in our Banking and Finance Litigation team for a no-obligation initial review of your situation by calling 01202 057738 or by email at William.email@example.com or firstname.lastname@example.org.