MORTGAGES

Rachel Geddes is business principal of Mortgage Advice Bureau. Q WHAT ARE THE PROS AND CONS OF A MORTGAGE PAYMENT HOLIDAY?

AA mortgage payment holiday is when you can defer payments for up to three months, and it can help during times of uncertainty. It improves cash flow in the short term and will allow you to pay for other household essentials. To qualify, you may be subject to a thorough financial assessment from your lender, so be prepared to show evidence of monthly income and outgoings. If nothing has changed for you financially, it would be best long term to continue paying your mortgage as normal, as deferred payments are added to your overall mortgage term, meaning future payments will increase. Interest is also being added to your mortgage debt, split across your payment term. This may differ depending on a lender’s criteria. It may also mean you’re not able to switch mortgage or change rate with your current provider if you’ve taken a holiday. If you’re due to remortgage, it might be worth weighing up the pros and cons, as you may fall on to the standard variable rate. Q HOW CAN I BEST TAKE ADVANTAGE OF THE CURRENT LOW INTEREST RATES?

ANow is a good time to review your mortgage, even if you have an early repayment charge, so discuss the options with your mortgage adviser or lender. With interest rates so low, you could reduce the overall term of your mortgage, the interest being added and, in turn, your monthly payments.

There are also some current criteria changes and delays in the assessment of applications, so if your rate is coming to an end in the next six months or so, now is the time to review what options are available. Of course, we don’t know what the bank rate will be next year, but it’s worth taking a look.

 For independent mortgage advisers in your area, visit unbiased.co.uk or vouchedfor.co.uk