Can you overpay?
If you are financially capable of overpaying your mortgage that could be a sensible option. A six-month payment holiday on a typical mortgage would increase total repayments by £1,016, according to AJ Bell. This is because interest accrues while payments are paused.
Some borrowers may have panicked at the start of lockdown and taken a mortgage holiday that wasn’t necessary in the end. In this case it may be a good idea to overpay to reduce the extra interest owed. Even within a fixed period, most lenders allow up to 10% overpayments without a penalty. Speak to an expert to see if this is affordable in your circumstances.
For those who have taken a financial hit during Covid19 you might want to consider an interest-only mortgage. This is where you pay interest charges on the loan but not any of the loan itself. Payments will be less than on a repayment mortgage, but at the end of the term, you will still owe the original amount borrowed. You may want to consider doing this for the short-term in order to recover financially.
Speak to an expert to find out how suitable this is for you and if you are likely to be eligible.
Mortgage rates are currently at record lows so remortgaging or switching lenders may be beneficial.
For those who have taken a temporary pay cut it is possible that it will be more difficult to meet a new lender's criteria when shopping around. In this instance your existing lender may discuss a potential switch to a new rate.
Speak to an expert about different options including variable rates and fixed deals. You may be surprised to find out how much could be saved.
Extend your mortgage term
Extending your mortgage term could be a practical option if you want to reduce the cost of monthly repayments. However you should consider this carefully and ideally speak to an expert as the overall interest paid over time will increase.
If you need further breathing space and want to extend your mortgage holiday or simply find out what options are available, the most important thing is to speak to a lender or a financial adviser. Finding a solution helps to relieve financial pressure, stress and uncertainty.