The financial services industry’s much-hyped mortgage holiday scheme, heavily endorsed by the government, could cost home owners hundreds of pounds in extra payments it is claimed.
On average, homeowners looking for help with their mortgage payments have an outstanding loan of £136,000 according to research by personal finance website money.co.uk.
Taking a three-month mortgage holiday would see their regular monthly payments jump by £11.21 to £720.22 and based on an average 21-year term, this would cost an additional £665.08 it adds.
With the scheme now extended to six months, the additional three month period could mean that it total £1,331.95 could be added to the full amount owed.
“Mortgage holidays have proved to be a lifeline for millions of homeowners, who would have otherwise struggled to meet their payments and may have faced losing their homes” explains Salman Haqqi, personal finance expert at the website.
“However, our findings show that payment holidays should be a short term fix. It’s important to remember that you will still owe the money and interest will continue to accrue while the deferred payments remain unpaid. And in most cases when a customer takes a three month payment holiday in a 21 year or 252 month mortgage, the end date of the mortgage doesn’t get automatically extended, so the customer now needs to pay back the mortgage in 249 months” he continues.
“As the nation gradually starts to open for business and furloughed workers are brought back, restarting mortgage payments should be a priority. And, if you are still able to make your payments in full, you should continue to do so.”