If you are taking a payment holiday from your mortgage or credit-card debt, tread carefully. Not paying your bills – even with the approval of your lender – could lead to problems with your credit rating and cost you hundreds of pounds. So far 1.6 million homeowners have taken a repayment holiday on their mortgage. It means you won’t have to make your monthly repayments for a few months, which could come in very handy during lockdown. But your bank is going to do very well out of the arrangement.
Lenders are set to make at least £821m in extra interest as a result of people taking a break from their mortgage repayments, says Kate Palmer in The Times. The average borrower will save £2,256 in repayments over a three-month mortgage holiday. But “they will ultimately pay £500 more than without the break because of the interest accrued on the unpaid sum”.
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