Mortgage holiday rules allow struggling consumers to effectively pause their repayments if they’ve been hit hard financially by coronavirus. Rishi Sunak extended mortgage holiday support a number of times throughout 2020 but it appears as though the measures will soon be coming to an end.
“The PDG enabled firms to deal with unprecedented demand for short-term support resulting from the pandemic.
“However, demand for payment deferrals has reduced and firms now have the capacity to offer both shorter and longer-term support.
“That support should provide better outcomes for consumers as it includes a wider range of options and is tailored to their individual needs.”
The Money Advice Service noted where consumers can, they should continue to make mortgage payments if they can afford to.
When discussing mortgage options, lenders will detail what is covered by the payment holiday, what the increases may be for the claimants’ repayments and what the total amount payable will end up being once the holiday has ended.
Lenders may discuss alternative ways of how claimants can repay their debts if it’s more suitable but the main options that could be considered are laid out below:
- Spreading deferred payments over the outstanding term of a mortgage
- Increasing the length of a mortgage term
- Making interest or capital only payments
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