Page 60 - Future Demands Jan 2021

This meant that many borrowers were then faced with higher monthly payments after the three or six-month period, which in turn leads to more interest being paid over the term of the loan.
Also, although the Chancellor was at pains to say that those taking a holiday would not have anything on their credit score against them for doing so, there was some evidence that lenders were taking this into account in their overall assessment of a borrower for any remortgage or future borrowing.
If this is not possible, then there may be further actions that can be taken to reduce your monthly payments. Moving part, or all, of the loan onto an interest only basis may well be possible, for example. It may not be necessary to convert all your mortgage to interest only, and it may be that putting part of the mortgage on this basis could give you the breathing space you need.
Dependent on your age you may also be able to extend the overall loan term which would also have the effect of reducing your monthly payments.
FUTURE DEMANDS
“THE WORD “HOLIDAY” CONJURES UP A WHOLE HOST OF DIFFERENT IMAGES – FROM RELAXING IN THE SUN TO SKIING DOWN A MOUNTAIN – NOT WORRYING ABOUT DEBT PILING UP”
Anyone looking to remortgage whilst on a repayment holiday would find it difficult to do so.
For those coming to the end of their “holiday” period, it makes sense, if they can, to simply repay the amount of interest they have deferred in one lump sum to get things back on track. It is important to check the terms of the product with the lender to make sure you can do this without incurring any kind of repayment penalty.
However, remember that overall you would end up paying more in interest the longer the mortgage term lasts.
The good news is that there are options and overall lenders have dealt with this incredibly well, so don’t be afraid to speak to them about your personal situation.
We would of course highly recommend you speak to a professional mortgage adviser first to help determine the best course of action.
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