Mortgages and coronavirus: what to do if you’re affected

We’re on a mission to help everyone move on up to a better financial future, so we’ve put together this guide on what to do if you’re struggling with mortgage payments during the coronavirus pandemic. It's updated on a regular basis, so you can have all the latest info in one place.




Mortgage repayments

I can’t pay my mortgage

The banks have agreed with the government to give homeowners a three-month mortgage holiday to those who need it. You have until 31st October to request a payment holiday from your mortgage lender.

If you have lost your job or now have much less income due to coronavirus, this could give you some much-needed breathing space and help you get back on your feet.

The Financial Conduct Authority has also proposed that repossessing a home can’t be done until after 31st October.

Buy-to-let mortgages are also eligible for this payment holiday.



Will I pay interest during my mortgage holiday?

Yes. While you won’t have to pay anything during your mortgage holiday, you’ll still rack up interest. This means you’ll likely pay more overall.



What happens when my payment holiday ends?

If you can afford to start making repayments after the three month holiday then you should do so. But, if you are still struggling and can’t start making payments again, the Financial Conduct Authority has announced that customers can ask their bank to extend their payment holiday for another three months.



If I take a mortgage holiday, when do I make the payments up?

Your lender should offer you different options to make up the repayments, depending on what works best for you and what you can afford.

You may pay an increased amount spread across a set number of months, or across the remaining mortgage term. Alternatively, you could increase the length of time you repay your mortgage.

If you want to take a mortgage holiday, or extend it, you should think about how these repayment plans will affect you. Your payment date won’t change.



I’m self-employed — can I still get a mortgage holiday?

Yes. If you’re struggling to keep on top of your repayments due to coronavirus, get in touch with your lender to talk through your options.




Are there any exceptions?

This payment holiday is designed for any homeowner affected by coronavirus. The mortgage provider will want to get your holiday approved quickly, so it’s likely you won’t have to pass any affordability checks, but this might not be the case with all mortgage providers.

If you can’t afford a higher monthly repayment, some mortgage providers might consider extending your mortgage. This will likely be assessed on a case-by-case basis, so it’s best to speak with your lender.



How do I get a mortgage holiday?

Get in touch with your mortgage provider as soon as you can to talk through your options. It’s best to do this sooner rather than later if you’re struggling to stay on top of your repayments. Keep in mind, banks and lenders are likely to be much busier than usual.

You can find the application form for a mortgage payment holiday below. Click the name of the bank to go to their website. If your mortgage provider isn't listed, visit their website.


Barclays
Coventry Building Society
HSBC
Lloyds
Nationwide
RBS
Santander
TSB
Virgin Money
Yorkshire Building Society



Will a mortgage holiday affect my credit score?

No, your credit score will not be affected by taking a payment holiday if you have agreed it with your lender. If you are approved for another three month holiday, this will also not affect your credit score.

If you miss a mortgage payment without an agreement in place, it will be treated as a missed payment and could harm your score.

You can see if your payment holiday has been recorded by the lender by checking your free credit report. If it shows a missed payment, you can raise a dispute on your report to get it sorted. You should also double-check with your lender, to make sure it doesn’t happen again next month.

It’s best to check your report on a regular basis, as it may take a while to update.


Check my credit report now

If you make sure everything is as it should be now, it'll make it easier when things go back to normal. With a good credit score, you can get the credit you need when you need it, improve your financial footing, and move on up to a better future.



What do interest rate drops mean for my mortgage?

The Bank of England has cut the base interest rate to 0.1%. This is a historic low rate and could affect your mortgage, depending on the type of mortgage you have or apply for.


Tracker mortgages

A tracker mortgage is based on the Bank of England’s base rate, plus a percentage on top of that. Now the Bank of England has reduced the base rate to 0.1%, your monthly repayments should decrease.


Variable mortgages

Lenders may reduce their interest rates, but this is their decision. Get in touch with your mortgage provider to find out.


Fixed mortgages

Unfortunately, the rate you have will stay the same until the fixed period ends.


New mortgages

You can still apply for a new mortgage, but it might take longer. For example, if a surveyor needs to visit your home, you might have to wait until the lockdown ends. Plus, banks and lenders are likely to be busier than usual, so it could take longer for them to process your application.



Should I remortgage?

With the interest rates significantly lower, remortgaging could help to reduce your monthly outgoings. But, check if you have to pay an early repayment charge, as this could make it less cost-effective.

If your current mortgage deal is due to end in a few months, you'll likely automatically move onto a standard variable rate, which could cost you more. Your lender should contact beforehand, so you won't forget. But, if you don't hear from them, contact them to find out if you can get a better deal when it ends.

Be sure to look around at other lenders as well. Although there are fewer deals out there at the moment due to coronavirus, you could find a cheaper deal elsewhere.



I’m worried about getting into debt

Debt charity Stepchange offers free help and advice to those struggling. They can guide you through sensitive matters, and have a host of information on their website about debt and coronavirus.

Their phone lines are still open but there are less staff working, so bear this in mind when calling.


Visit the Stepchange website

Citizens Advice is also available to give free and confidential advice. They cover a range of issues, including debt. As well as guides and information online, you can talk to someone online and over the phone, though this may take longer than usual at the moment.

Visit the Citizens Advice website.