Coronavirus mortgage holiday: UK banks announce loan repayment holidays for borrowers affected by outbreak

Several UK mortgage lenders have announced loan repayment holidays to support homeowners affected by coronavirus.

Royal Bank of Scotland said it will defer mortgage payments for up to three months to affected borrowers.

The state-backed bank is 62 per cent owned by the taxpayer and has announced the emergency measures to support customers who might lose their jobs or see their income decline if they cannot work due to illness or lockdown.

A spokeswoman for RBS said: “We are monitoring the potential impact of coronavirus across all our customers to ensure we can support them appropriately through any period of disruption. We have a strong track record in working with our customers who are affected by disruption outside of their control.”

TSB also said borrowers could have mortgage repayment holidays for up to two months.

UK Finance said all its members were putting measures in place to support borrowers affected by the virus. Stephen Jones, the industry body’s chief executive said: “All providers are ready and able to offer support to their customers who are impacted directly or indirectly by COVID-19, which could include offering or increasing an overdraft or allowing repayment relief for loan or mortgage repayments: asking for help early is key.

“We would encourage customers who think they may be affected to contact their provider as soon as possible to discuss the support available to them.”

Miles Robinson, head of mortgages at online broker Trussle, said: “Self-employed and gig economy workers might be concerned about their income becoming more unstable, at least temporarily, which may affect their ability to pay the bills at the end of the month.

“The good news is that mortgage lenders don’t live under a rock. They know that coronavirus is causing severe uncertainty. They’re also aware that as a result of the outbreak, some customers might be unable to make their monthly mortgage repayments.”

The announcements were made after the Italian government said it would suspend mortgage payments and other household bills across the country, which is now on total lockdown.

UK lenders adopted similar measures in the 2009 recession.

Depending on your mortgage, you might be able to take a break from making repayments or reduce the amount you pay, usually for up to six months.

This will depend on your previous payment history, the type of mortgage you have and whether your lender offers this as an option. It must always be agreed with your lender – you can’t just stop payments if you’re feeling a bit broke.

This can be useful if you’re facing a temporary drop in income, for example during maternity leave, after a redundancy or in case of illness.

However, in most cases you will still be accruing interest on your mortgage and won’t be making any repayments, so your outstanding mortgage balance will be higher after a mortgage holiday.

Talk to your lender as soon as possible if you’re worried about making your mortgage repayments or fear you might fall into arrears.

“If you find yourself struggling, make a proposal to your lender - you might not be able to afford to pay all your mortgage, for example, but you could offer to pay half. The important thing is to ask for help as early as possible rather than ignoring the issue. While lenders should offer support to borrowers, they can only do that if they know there is a problem,” said Mark Harris, chief executive of mortgage broker SPF Private Clients.

“Lenders aren’t under any obligation to give you a payment holiday and if you are a habitual late payer of your mortgage, they are less likely to be supportive. However, even if you are in this situation you should talk to your lender and see what can be done.”

There is a chance that taking a mortgage repayment holiday could also affect your credit file, so Mark Harris’s advice is to make sure you keep a note of any conversations and retain all correspondence in case the lender accidentally marks your holiday as arrears. That way you should avoid any issues when you come to remortgage.