Mortgage holidays

7th April 2020

As a buy-to-let landlord you may be entitled to a 3-month mortgage holiday if your tenants are having financial difficulty paying rent, as either a direct or indirect result of Covid-19. Landlords who take payment holidays are expected to pass on this relief to their tenants. A payment holiday is an opportunity to defer payments for a period of time and does not release the homeowner or tenant from their liability to pay in full.

All lenders are required to offer payment holidays, although mortgage holidays are only available to people who are up to date with their payments. Lenders terms may vary, many have announced they will be offering repayment holidays as standard to customers affected, whereas others have announced the help is only available on a case by case basis. You will not need to complete any affordability tests but your lender may require evidence or for you to self-certify that you or your tenants have suffered financial hardship due to Covid-19, the proof will vary from one company to another so it is essential you speak to your lender for guidance.

The FCA confirmed homeowner’s credit scores will not be affected when they take out a mortgage payment holiday. Credit agencies have collectively introduced a special measure called an ’emergency payment freeze’ meaning credit scores will be protected and maintained at their current level for the duration of the payment holiday. The FCA guidelines also clarified lenders shouldn’t charge any additional fees to set up a payment holiday, however, the interest will still be payable. By delaying payments interest will continue to accrue on the current amount owed.

There may be alternative options available to you, such as; moving your mortgage to interest-only payments for a period of time, extending your mortgage term to reduce your monthly payments or adding the deferred payments to the overall amount you owe and spreading this over the remaining mortgage term.

The government has introduced many measures to ensure tenants are still able to pay their rent and bills, they are urging landlords to be flexible where a tenant is experiencing financial difficulty and lenders are on hand to assist. Please don’t hesitate to get in touch with the team on 01273 645797 if you need any further advice.

Please note this information is accurate to the best of our knowledge on the date of publication. We endeavour to keep our Covid-19 content as up to date as possible, however, due to advice and guidance changing regularly, please refer to gov.uk for the latest advice and information.