Recent statistics from the trade body UK finance has revealed that 17% of mortgages are taking a payment holiday.
1.86 million mortgage payment holidays have been granted for both residential and buy-to-let mortgages.
For the average mortgage holder, the payment holiday amounts to an average £755 per month, with average interest payment deferred each month standing at £260.
The figures come as the city regulator, the Financial Conduct Authority, announced that from Thursday 4 June, borrowers will be able to apply for a further three-month mortgage payment holiday.
The Chancellor of the Exchequer Rishi Sunak originally announced the mortgage payment holiday on the 17th March, and subsequently lenders have received literally thousands of requests for mortgage holidays due to the lockdown during the COVID-19 pandemic.
Stephen Jones, UK Finance CEO, said “mortgage lenders are committed to supporting their mortgage customers through these difficult times, but warns it will always be in the borrower’s best interests to pay their mortgage if they are able to.”
“A payment holiday may not be the right choice for everyone, and borrowers should only apply if they need one. Any borrower who is concerned about their financial situation should check with their lender as early as possible, with providers’ website giving the latest information on the support available,” he said.
Matt Lenzie from Commercial Mortgages Broker said: “Payment holidays can be helpful if cashflow is difficult, however, landlords do need to consider that some lenders will not lend to you if you have an active payment holiday, as it can be a sign that the borrower may be over leveraged. We have had a number of instances where borrowers have had to repay their payment holiday backlog, and cancel the payment holiday to ensure that the lenders will refinance their existing assets. Buy to let finance, in particular for portfolio landlords, does consider your entire portfolio, even assets which are with other lenders, so this can potentially be flagged up.”
If you are considering refinancing an asset, or would like to discuss a payment holiday get in touch with our team today.