Government announces three-month mortgage holiday in Covid-19 package
Yesterday evening, Chancellor Rishi Sunak confirmed that anyone struggling as a result of the coronavirus outbreak will be able to take a three-month mortgage repayment holiday.
A number of lenders had already announced repayment holidays for those affected by Covid-19, but the Government’s announcement means all lenders will now have to honour the three-month time frame.
Sunak didn’t set out further details of the plan, but lenders have advised anyone struggling with repayments to contact them directly.
During the press conference, Sunak also announced new financial measures to bolster the UK economy, including further funding for small businesses, following on from the £12 billion support package committed during the Budget last week.
The new measures include a £330 billion scope for loans for struggling firms, regardless of their size, and loans of up to £25,000 for businesses in the hospitality and retail sectors – the business rates holiday has also been extended to 12 months for firms in these sectors. Small businesses are also able to apply for loans of up to £5 million, with no interest due for the first six months.
Sam Harhat, head of financial services at Andrews Property Group, commented: “The Government’s backing of mortgage holidays of up to three months for struggling households is clearly welcome but, as ever, the devil is in the detail.
“If this is a smooth and seamless process that will enable homeowners to self-isolate without having to worry about their mortgage payments then clearly it is a significant move in the right direction.
“Exactly how much lenders are onside remains to be seen, as are the logistics of such a major initiative, but on the surface this is exactly the kind of bold action homeowners wanted to see.
“It remains to be seen if the mortgage holiday will extend to landlords who may be struggling if their tenants are in financial difficulty.
“The elephant in the room, of course, is how the Government will be helping the huge numbers of tenants who may also struggle with their rental payments.
“For homeowners, the Government made all the right noises in Tuesday’s media conference but for tenants we need considerably more clarity.”
Rob Griffiths, director of the Mortgage Market Alliance, added: “Mortgage borrowers who wish to accept a mortgage holiday from their lender need to be fully aware of the detail of such an arrangement and what it actually means for their mortgage payments, the length of their term, and how this might appear on their credit file.
“This is not the lender paying the borrower’s mortgage for them for a three-month period but a deferment of these mortgage payments into the future. With that being the case, borrowers should get the detail of any such arrangement and use their mortgage adviser to provide an explanation of what this actually means for them, and to understand what (if any) other options might be available.”
Source: Financial Reporter