Most banks will offer a break during the coronavirus crisis, but it doesn’t suit everyone
About 1 million mortgage holders have applied for a payment holiday in the past fortnight, according to industry sources. Should you do so, too?
1. It’s not free money. But it’s very cheap. Let’s be clear that you still have to pay for your holiday, the banks are not just writing off the money. They add whatever you didn’t pay to your total mortgage, and when the three months is up your repayments go up. But with interest rates so low, it makes surprisingly little difference. For example, using Moneyed.co.uk’s mortgage calculator, a £200,000 mortgage taken out in May 2018 at a 2.5% rate costs £897 a month. If you take the three-month holiday, afterwards the cost will rise to £910 a month. “If the choice is between really struggling or taking the mortgage holiday, then the additional cost further down the line is actually quite small beer,” says broker Ray Boulger of John Charcol.
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