The chancellor’s promise of a three-month mortgage payment holiday to customers affected by coronavirus does not currently apply to buy-to-let borrowers, UK Finance has confirmed.
Rishi Sunak announced yesterday that borrowers who fall into financial difficulty because of the covid-19 outbreak will be able to defer their payments for three months.
There have been widespread calls for the government to announce help for tenants struggling to pay their rent as so far the only financial support on offer is for home owners.
Mortgage lenders have also been urged to clarify whether borrowers who take a payment break will see a negative impact on their credit scores.
UK Finance says that lenders have different approaches and that arrears may be reported to credit reference agencies, but that firms will make efforts to ensure that forbearance offered under these circumstances does not have a damaging effect on a customer’s credit score
Lloyds Banking Group, Royal Bank of Scotland/ Natwest and Nationwide Building Society have all confirmed that deferred repayments due to coronavirus will not be treated as arrears and other lenders have been asked to follow suit.
While there is no agreement yet for mortgage lenders to extend payment holidays to struggling landlords, UK Finance says buy-to-let borrowers should contact their bank or building society as early possible to discuss the options.
UK Finance chief executive Stephen Jones 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.”
SPF Private Clients chief executive Mark Harris says: “A three-month holiday for mortgage holders who suffer financially as a result of coronavirus will be welcomed by many who have been worried about their jobs and how they will pay the mortgage.”
He adds: “Remember that as it stands interest will still be calculated over the period of the payment holiday and then added to the loan along with the repayment part of the payment.
“The monthly direct debit may then be increased to cover the amount added once you resume your payments.”
