Mortgages and the impact of Coronavirus

We've asked experienced housing debt adviser, Denise Callaghan, to look at some of the most important issues facing mortgage holders impacted by the coronavirus crisis. 

For the fortunate whose income has not been impacted by Coronavirus, your only mortgage concern may be whether you are on the best mortgage deal in light of the recent interest rate reduction. Unfortunately, many have suffered a sudden and crippling income shock and have no means to pay their mortgage in the immediate future.

If you find yourself in the position that you cannot pay your mortgage due to the impact of Coronavirus you need to contact your lender to inform them of this.

Mortgage payment holidays

On 17 March, the banking sector agreed with the Chancellor of the Exchequer to offer “forbearance” on mortgages. The main method of forbearance on offer is a “payment holiday”. This is essentially a deferral of payment for a period, with 3 months being the most commonly offered period of deferral. You need to contact your mortgage lender to request the payment holiday, you can do so by phone, but it may be quicker if you can make the application online.

It is important to note the payment of your monthly instalment is only being deferred to an agreed time in the future, that interest will still be charged during the holiday period, and that your monthly payment will be reassessed after the payment holiday to cover the missed payments, resulting in a higher monthly repayment. Online mortgage payment calculators can give you an idea of the impact that a holiday will have on future payments, but you should ask your lender for an illustration of the impact on your own personal circumstances. 

Mortgage holidays for borrowers with existing payment difficulties

If you have not missed any mortgage payments previously the application for a payment holiday should be relatively straightforward. However, if there are arrears on your mortgage account, your lender is likely to want to discuss your situation with you. If they feel that you will not be able to maintain the increased monthly payment after the holiday period ends, then they may not offer a payment holiday. They should, however, discuss all available options with you, for example an extension of the mortgage term or a change in mortgage product which will result in a lower rate of interest. Each lender will have their own policies and will assess on a case by case basis.

Borrowers with existing agreements to repay mortgage arrears

Many people will also find themselves in the position where they are unable to adhere to the terms of agreements reached previously with their mortgage lenders in respect of arrears accrued in the past. In such circumstances you should pay what you can afford towards the mortgage but also contact your lender to advise of how you have been impacted by Coronavirus. Take note of who you speak to, when and what is discussed.

If there is a Suspended possession order in place you should try your best to adhere to the terms of the order. However, if you are unable to do so, follow the steps above and contact your mortgage lender to discuss.

Court action in relation to mortgage arrears

At present the Chancery Division of the High Court in Northern Ireland is not sitting and cases have been adjourned generally. For those for whom possession action has already begun, this means their case will not proceed during the current crisis but will be relisted once it is safe for the courts to resume.

The Enforcement of Judgements Office is not currently enforcing possession orders so there will be no evictions carried out for an initial 3 month period, subject to review. However, once it is deemed safe to do so, evictions will be rescheduled.

Getting advice if you have are struggling to pay your mortgage

It is crucial for anyone who has suffered a severe income shock to maximise their income and, if you are unsure about your possible entitlement to assistance, seek advice. Ultimately, to safeguard your home, it is essential to be able to resume your mortgage payments as soon as reasonably possible.