The pandemic has placed acute pressure on the financial outlook for thousands of families across the country. Hina Bhudia, partner at Knight Frank Finance, explains what homeowners should do if they can’t meet their payments.

I was made redundant shortly after the onset of the pandemic and my savings are running dry. I’m concerned that I might not be able to pay my mortgage in the months ahead. What should I do?

Firstly, know that you’re not alone.

I’ve spoken with many homeowners in recent weeks who thought they’d never have to confront the prospect they wouldn’t be able to meet their mortgage obligations, but this is a truly unique time.

Official figures suggest some 2.5 million repayment holidays have been granted by lenders since the onset of the crisis, and 162,000 were still in force as of last month.

Secondly, know that the banks are prepared to help.

The lenders have dedicated teams that are experienced in dealing with situations like yours so you should call them, but not before sitting down and taking thorough stock of you monthly income and outgoings. Your lender will ask for details.

Should I ask them for a payment holiday?

That depends. If you aren’t planning to move home in the near future and don’t have other options, taking a payment holiday of up to six months may give you the breathing space you need. However, you may have options you haven’t considered.

If you have equity in your home, your lender may be willing to let you make payments only on the interest of your mortgage for a short period of time. They might also look at your rate to see if you’re eligible to move to a better deal, or extend the term of your mortgage. All these can result in significant cuts in your monthly outgoings.

But won’t that put a mark on my credit file that hurts my chances of securing finance in the future?

No, not if you’re out of other options and provided you continue to meet your obligations ,even if you renegotiate them. There have been reports of borrowers taking payment holidays when they weren’t absolutely necessary, then seeking to purchase homes shortly after, in which case lenders may take an alternative view.

Ok, but what if my lender won’t enable me to move to interest-only payments of a better rate?

Your next step should be to call a mortgage broker that deals with lenders across the whole market. Knight Frank Finance has relationships with more than 180 banks and lenders. Your lender may not be able to cut your outgoings, but one of those might.

We can also look at other solutions. Do you have family or parents that have equity in their home they might be willing to release in order to help you? Can we name a relative on your mortgage that would take their income into account? Other lenders may offer longer terms or lower rates too. It’s only possible to know if you explore the market at large.

If you are concerned about your mortgage and would like to discuss your options, do get in touch.