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Special feature: Important questions answered for anyone considering taking a mortgage repayment holiday during coronavirus crisis

Good advice from the experts

Average Tipperary homeowners needlessly paying €2,171 on their mortgage - expert

With Covid-19 impacting so many individuals and families right across the country, financial pressures have been at an all-time high.

As a result, banks have seen an increase in mortgage repayment holiday applications; however, many people are still unsure what they are and how they work, and importantly if they would benefit from taking one.

TSB’s Head of Mortgages, Nick Smith answers some very crucial questions:

 

What is a Mortgage Repayment Holiday?

A mortgage repayment holiday is simply a financial ‘break’ from your monthly repayment. This is available for customers who are unable to make their usual monthly mortgage payments.

 

How will it impact my finances?

Payment holidays may not be right for everyone. It’s important to remember your payment will not be waived but simply deferred.

If you choose to take a payment holiday you will need to be aware that the amount you owe will increase as you’ll still be charged interest and the missed payments will be made up over the remainder of the mortgage term.

 

Will my credit rating be affected?

Taking a payment holiday will not impact your credit rating.

 

How much notice to do I need to give my Bank?

Each bank has its own timescale, it is typically between 5 – 10 working days from the time of your request.

If you’re concerned about making your monthly mortgage repayments, get in touch with your bank as soon as possible.

 

How do I apply?

Most banks have online forms to help make it easier for customers if they know this is the best option for them, look at your mortgage provider’s website for all of the contact options. 

 

How long can I take a repayment holiday for?

Covid-19 repayment holidays are for a maximum of three months.

It’s important to remember your term will not be extended beyond this but if you’re still concerned about your monthly payments, then speak to your bank for help. They can assist and find the best option that is suitable for you.

 

Do I have to take three months?

No, you can take up to three months - if you think you don’t need the full three months, your bank can work with you on the right timescale for you. 

 

If I’m able to, can I make an overpayment?

Yes, absolutely. Whilst a payment holiday does not require you to make any payments during this period, if you are able to make some payment towards your mortgage, then it will reduce the amount you pay overall. No matter how small the contribution, this will help you in the long run. This will not impact your payment holiday request.

 

Should I take a repayment holiday if I am financially secure?

It’s not advisable to take one if you don’t need it. They are designed for those in need of financial assistance and who know they will be unable to meet their monthly payments.  As I mentioned, you will have to increase these payments later– so if you are financially secure and can avoid taking a repayment holiday, then it’s likely to be best for you to keep your monthly payments the same.

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