The Greater Bristol Letting Agency
0117 973 9394
Accommodation Unlimited Letting Agents

What is a mortgage holiday and how do I apply

If your tenant is struggling with their rent due to the current crisis, you may not have the money to pay your buy to let mortgage.  Firstly do not panic.  Contact your buy to let mortgage provider and explain the situation.  They should be able to help by offering a three month mortgage holiday.  I am no financial expert but luckily the Martin Lewis website has come to our aid.  So with thanks to Martin Lewis here is the latest on Mortgage holidays

If keeping up with your bills and food on the table may be a challenge, speak to your bank. On Tuesday 17 March, banks agreed with the Chancellor that they will offer 'forbearance' (tolerance and help) on mortgages.

This means they all should offer those struggling a three-month 'holiday', allowing customers a temporary break from having to make mortgage payments during this time. (Though it's worth noting this is a voluntary agreement with banks – it isn't compulsory for them to offer mortgage holidays.)

If you are going to apply for a mortgage holiday, it's best to do it online where possible, as phone lines are likely to have huge backlogs.

How would this work in practice? Again we await final confirmation, but here's how it typically works. Let's imagine you have 19 years and three months left on your mortgage. For the next three months you wouldn't pay anything. Then when your mortgage repayments resume, the total you owe would be spread over the following 19 years – so you would see a very small uplift in future payments.

You will still be charged interest – but it's added to the total cost

It's worth noting that if you take a mortgage holiday you WILL still be charged interest for the time you're not making payments. But you won't have to pay it back immediately – it'll be added on to the total cost of your mortgage and factored into repayments when you start making them again.

Warning – mortgage holidays MUST be agreed with your lender

To take a mortgage holiday, whatever you do, don't just stop your direct debit or standing order. Any mortgage holiday MUST be agreed with your lender first. This means you need to contact your lender and make a formal agreement as to how long you wish your 'holiday' to last.

If you simply stop your payments without warning this will be recorded as a late payment, which will not only put you into arrears but will also likely affect your credit file (which could make it harder for you to access credit in future). Even if it's a struggle, make sure you keep paying until you can agree the holiday