What All Mortgage Customers Need To Consider After Covid-19
The Chancellor of the Exchequer announced on March 17th 2020 that all lenders would offer a three-month payment holiday to anyone having financial hardship due to the Coronavirus pandemic. The Financial Conduct Authority (FCA) has also released new rules on how mortgage lenders treat their mortgage customers properly.
Many people have felt relieved knowing there will be some comfort in the short term. However, this has created many unresolved issues on how this works and whether it will harm future borrowing ability.
Due to an unusually high volume of calls and inquiries, getting through to your lender may take longer than usual at this time. Therefore, we’ve put up a few things for mortgage customers which help them to relieve their concerns.
Important Things For Mortgage Customers During Coronavirus Pandemic:
What is the procedure for applying for a payment holiday?
Although this is constantly changing, many lenders have established a dedicated site on their customer site that will help address some of your questions. Mortgage customers are also being asked to apply online rather than calling because inquiries have increased massively.
What is a mortgage payment holiday?
If you take a mortgage payment holiday, you won’t have to pay your mortgage for up to three months, and the lender will add these payments to your amount. Therefore, your mortgage balance will increase, and your monthly payment will be recalculated over the remaining period of your mortgage.
For the rest of your mortgage term, your monthly payment and the amount of interest you pay will increase. If your mortgage is suitable, the payment holiday does not affect your credit score, and you will not fall behind with your payments. Your options for a payment holiday may be limited if your mortgage is already in default, but you’d be able to work out a different arrangement with your lender.
Also Read: Is It Worth Getting an Offset Mortgage Account?
May the Coronavirus impact your mortgage application, and is it possible that the mortgage offer will be withdrawn?
Although a lender has the right to refuse a mortgage application, this is highly unusual. Because the mortgage has been agreed upon, the lender is likely to respect it until your financial situation changes.
If your income completely changes and your mortgage becomes unaffordable, you should consider not proceeding with your mortgage application. If your income does not change, your mortgage application will continue to be processed usually.
The situation with any new application, on the other hand, changes daily. The situation may be different if you have not yet applied. A few mortgage lenders had decided to stop accepting new applications for a certain period of time to deal with the significant volume of enquiries about the impact of Coronavirus. It was only a short-term solution.
If you are a landlord and your tenant can’t afford the rental payments. What should you do?
If their renters cannot pay their rent owing to Coronavirus, the government has announced that residential buy to let landlords would be eligible for the same three-month mortgage repayment break as residential homeowners (Covid-19).
According to the government, landlords could not remove renters who could not pay their rent owing to the Coronavirus pandemic. Landlords and tenants were expected to work together to develop an affordable payment plan.
Also Read: 7 Buy To Let Mortgage Investment Tips For Beginners
What happens to your mortgage insurance premiums when you make a payment holiday?
You should keep paying your insurance rates because they won’t be cancelled even if you take a mortgage payment break. If your insurance plan includes a “waiver of premium” option, that you’re unable to work due to illness, your insurance premiums may be cancelled. If this is the situation, talk with your insurance company about your choices. You mustn’t cancel your policies or stop paying your insurance premiums, especially given the risk of becoming infected, as you’ll need your mortgage protection more than ever.
Last Words:
If you are struggling to pay your mortgage insurance costs, call your insurance company as soon as possible. They may be able to work out an additional payment plan with you. Mountview Financial Solutions is the best option in East London and Essex for your mortgage solution with suitable mortgage products & deals. We will continue to provide you with the same quick and dependable service you have learned to expect, and we will continue to provide you with the first advice in the future.
