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Mortgage Holidays

Frequently Asked Questions

 

What assistance are lenders offering during the Coronavirus crisis?

The Financial Conduct Authority (FCA) has stated that they are expecting lenders to offer Payment Holidays to borrowers who are having difficulties meeting the payments on a mortgage secured against their home, as a direct result of the coronavirus.

Can I get any assistance with the payments on my BTL mortgage?

Yes, you can but you must contact your lender first to get their permission.

What about bridging and development finance?

The FCA scheme doesn’t cover this, so it’s important to contact your lender ASAP. Most bridging loans have interest retained or rolled up, so you don’t make any monthly payments. But an exit of a sale or remortgage may be delayed so speak to them now.

What is a Payment Holiday?

A Payment Holiday means you agree with your lender that you will not make mortgage payments for a specific amount of time. Payment Holidays are designed to help when you may experience payment difficulties – in this case, because of the coronavirus situation.

What happens to the missed payment during and after a Payment Holiday?

During the agreed amount of time of a Payment Holiday, any payments you don’t make will be added to your mortgage balance and interest will continue to be charged on the total mortgage amount you owe.

At the end of the Payment Holiday, you will have to make up the missed payments. There will be various options for doing this, for example by increasing your monthly payments slightly, or by adding a short extension to your term. Your lender will be able to explain what options it offers. 

How do I apply for a Payment Holiday?

You should contact your lender directly if you think you may potentially experience payment difficulties as a result of the coronavirus situation. Each lender will have information on their website on how to apply. It may be an online form or you must speak to them. If you must call it may be a long wait with some lenders.

Will my lender need proof that I am experiencing financial difficulties?

Your lender shouldn’t need any evidence that your income has been affected by a coronavirus, but they may ask you to provide information to help them make their assessment. If your tenants are paying the rent on time you should not be asking for a holiday.

Will I pay interest on my mortgage during the Payment Holiday?

You will still be charged interest during the payment holiday, which will be added to your mortgage unless your lender has told you otherwise.

What interest will I pay during this period?

You will continue to be charged interest on the amount you owe, as well any fees owing according to your lender’s tariff of charges and the terms of your mortgage.

What happens when the Payment holiday ends?

At the end of the agreed Payment Holiday, you will continue to make your mortgage payments, and you will need to agree with your lender a manageable way to make up the missed payments given your circumstances. Your lender will explain to you the options that they offer.

If you are still not able to make your full mortgage payments due to coronavirus, then it may offer you a further Payment Holiday if appropriate to your circumstances.

How will taking a Payment Holiday affect my credit score/file?

The FCA has stated that lenders should ensure that taking a Payment Holiday will not impact your credit score. However, a credit score and getting BTL lending are two different things. A lot of lenders look at credit files, annual mortgage statements, bank statements and their internal records if you are already with them.

If they see a payment holiday early in the crisis will they ignore it? Some may but others won’t.

Several lenders have already declined new mortgages, further advances where payment holidays are in place.

Will my lender agree to a Payment Holiday?

Based on the current FCA guidance, we expect lenders to offer Payment Holidays to borrowers who may experience difficulties maintaining payment on a mortgage secured against property, as a result of the coronavirus.

Many lenders have already committed to this. Your lender may also offer other options if they are more appropriate for your circumstances and where it is in your interest.

What if I am already behind on my mortgage payments?

You should still be able to have a Payment Holiday but will need to discuss this further with your lender who will consider whether a Payment Holiday is appropriate as well as any measures that are already in place to help you through your payment difficulties.

How long do I have to apply for a Payment Holiday?

If you think you may experience payment difficulties and may need a Payment Holiday, you should speak to your lender as soon as possible before the next mortgage payment is due.

The FCA has stated that you can apply for a Payment Holiday at any time before 20 June 2020, although this may be extended as the Coronavirus situation evolves. The Payment Holiday will not start however until it has been agreed with your lender.

What service response times can I expect from my lender?

Lenders have committed to responding to consumers as quickly as possible, however, due to high levels of demand and staff having to work from home, the service levels you receive may be slower than usual.

My promotional interest rate is coming to an end shortly. What interest rate will I pay once my initial rate period ends?

The rate you pay will be based on the terms of your mortgage contract and your lender’s tariff of charges. Should your initial rate under the terms of your current mortgage expire during the Payment Holiday, we would expect that the interest will then start to accrue at the rate that was set in the mortgage offer, which for many borrowers will be the lender’s follow on rate, which is usually significantly higher.

Can I apply for a Product Transfer during my Payment Holiday if my promotional rate ends during this time?

Each lender will have their own lending policy for any specific situation such as this, and we would recommend you contact your lender directly to discuss your circumstances in more detail and they will be able to assist you further.

Can you advise me whether I should request a Payment Holiday, and can you arrange this on my behalf?

We can provide you with generic guidance, however, the decision on how to proceed needs to be made by each borrower based on their specific circumstances and following any discussions with their lender.

What should I do next?

If you are having difficulties maintaining your mortgage payments and require more information on your options, we recommend you contact your lender at the earliest opportunity to discuss your circumstances in more detail, and the options available to you.

Please note that due to the sheer volume of enquiries, lenders may not respond as quickly as they would under normal circumstance.

Searchlight Finance Limited is registered in England and Wales No.07929050 Searchlight Finance Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (http://www.fca.org.uk/register) under reference 743220. The FCA do not regulate Business Buy to Let Mortgages or most Commercial Mortgages and Bridging Finance. ICO Number Z3109319. Your property may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it.