Chancellor Rishi Sunak yesterday unveiled measures to help those struggling financially as a result of the Covid-19 outbreak.

Included in his announcement was a three-month mortgage ‘holiday’ for those financially impacted by the virus.

However, borrowers are being reminded that the measure does not mean that the payments are written off.

Mortgage Market Alliance director Rob Griffiths says: “Mortgage borrowers who wish to accept a mortgage holiday from their lender need to be fully aware of the detail of such an arrangement and what it actually means for their mortgage payments, the length of their term, and how this might appear on their credit file.

“This is not the lender paying the borrower’s mortgage for them for a three-month period but a deferment of these mortgage payments into the future. With that being the case, borrowers should get the detail of any such arrangement and use their mortgage adviser to provide an explanation of what this actually means for them, and to understand what (if any) other options might be available.”

UK Finance chief executive Stephen Jones urges customers to contact lenders.

“Mortgage lenders will support customers who are experiencing issues with their finances as a result of COVID-19 and the options include a payment holiday of up to three months,” he says.

“Monthly mortgage payments tend to be the largest outgoing for the vast majority of households and lenders are keen to reassure homeowners that the industry is working hard to put measures in place to support them during these uncertain times.

“Customers who are concerned about their current financial situation should get in touch with their lender at the earliest possible opportunity to discuss if this is a suitable option for them.

Private Finance mortgage consultant Chris Sykes says: “While many holiday plans are in disarray, mortgage borrowers will welcome a break from monthly repayments in the current climate. The biggest beneficiaries are likely to be customers who are self-employed or have little saved to help them through these challenging times. A mortgage holiday will ease concerns about loss of earnings if people are isolated for any period or if their working hours are reduced due to business closures.

“This flexible relief is an intelligent move for both lenders and borrowers. Lenders will reduce the risk of having ‘bad debt’ on their books if customers miss payments without taking a mortgage holiday, which can reflect poorly on their business and make it harder to raise finance in future. Customers can rest easier by avoiding the danger that a missed payment creates a blemish on their credit profile which lasts longer than the current pandemic and limits their borrowing options for three years or more.

“Customers need to be mindful that pre-emptive action will be key to making the most of a mortgage holiday. It will be important to agree deferred payments with their lender in advance, so they are not recorded as missed.”