The next few months are likely to be tough for a variety of reasons.
One of these might be because of the confusion surrounding mortgage payments, and what the UK governments' emergency laws mean for the average person.
To help those who might be unsure about where they stand on their mortgage payments and their financial situation, we asked Paul McCoubrey, a partner at Navigate Independent Financial Advisors, to break things down for us.
"For many, the biggest financial outgoing will be your monthly mortgage payments," Paul explains.
"If you're struggling financially due to the Coronavirus crisis, you may have welcomed the recent promise by the Chancellor to implement payment holidays of up to three months for those who are struggling financially.
"The mortgage payment holiday will provide flexibility in repaying your mortgage by allowing you to stop or reduce your monthly payments for up to three months.
"This won't be suitable for everyone but could provide much needed help for those who require it - albeit you need to be aware that this is not free money and you will be required to pay this back when your payments start again after the payment holiday.
"The first step will be to contact your lender. You will also need to be aware that not everyone will be granted a payment holiday - and that most lenders have posted a link specifically for mortgage payment holidays due to Coronavirus on their websites, as well as an online application service. There will be a fast track approval process in place, so you should get a quick decision. Navigate are also being informed that individual credit ratings should not be affected."
Paul goes on to explain what will likely happen to your payments after the three month mortgage payment holiday is up.
"It's likely the lender will spread your outstanding payments over the outstanding term of your mortgage, so you will see an increase in your monthly mortgage payments. The shorter the term left on your mortgage, the larger the increase in your monthly payments, once the mortgage payment holiday is over. You should consider the impact this will have on your future financial commitments.
Paul also provides a useful calculator for people to work out these payments for themselves. You can access it here.
"When consulting the lender websites, the updates are reasonably consistent and include the following key points to satisfy their eligibility criteria for what constitutes a mortgage payment holiday:
- Your finances have been affected by Coronavirus
- You are up to date with your monthly mortgage payment and are not in arrears
- You have consent from everyone named on the mortgage
"For Buy to Let Mortgages, the lender may be able to consent to a payment holiday if, once again, your mortgage payments are up to date and not in arrears and you can confirm that your tenants are having difficulty in paying their rent due to Coronavirus.
"Currently, the lenders can only offer a 3-month payment holiday for this situation. Therefore it is vital that if you are looking to apply for this, you do this at the most appropriate time for you and your individual circumstances. It is also vital that if you feel you need this support that you act fast to ensure that your mortgage does not fall into arrears.
"If you are coming to the end of a mortgage product, it is important that you understand that we/you WILL NOT be able to switch your mortgage to another preferential product with your current lender whilst on a payment holiday. You may want to arrange a new deal prior to taking a payment holiday.
"For those of you who may have exercised the 'overpayment' allowance on your current mortgage, you may be able to 'underpay' on future monthly mortgage payments up to your overpayment reserve. Once again, you will need to contact your lender directly to arrange this."
Navigate IFA are specialists in all areas of personal finances, from buying your first house to protecting your last house. Contact us via our website - www.navigateifa.com - email us at office@navigateifa.com or call us on 02890 769 769. We are here to help and we'd love to hear from you.
