Mortgage holidays are ending, here’s what you can do instead

Hina Bhudia, partner at Knight Frank Finance, says homeowners concerned about the end of mortgage holidays should consider other options.

The financial watchdog said it expects it will no longer require lenders to offer payment holidays after October 31st.

This will come as worrying news to any homeowners that have experienced the loss of jobs, working hours, commission or bonus payments, and are concerned they may be unable to keep up with their current mortgage payments.

More than 1.9 million people have taken payment deferrals since the scheme’s inception, covering about one in every six mortgages in the UK, according to UK Finance.

Borrowers looking for payment holidays may still be able to obtain one – the Financial Conduct Authority yesterday called on banks to continue supporting homeowners struggling to pay mortgages – though any outcome will depend on the policy of your bank or building society.

It’s likely, however, that you have better options. Payment holidays may seem attractive, but they can be taken into consideration next time you apply for a mortgage.

Instead, you may be able to cut your current mortgage rate. Average fixed-rate mortgage deals have crept up by as much as 0.33% since July, but they remain lower than they were back in March and are still close to record lows, according to Moneyfacts.

You may also be able to extend the term of your mortgage, resulting in a cut in your monthly outgoings.

These are just two options that may not be on offer with your existing lender, so get in touch for a financial health check to see what’s possible.