Mortgage holiday could leave homeowners out of pocket

Taking an extended mortgage holiday could leave homeowners £4,000 out of pocket - equivalent to an extra £47 on their monthly bills. There are growing concerns that homeowners who take advantage of the scheme during the crisis could be facing further costs later on. Government rules mean that borrowers can ask to take a break from their mortgage payments for up to six months if they have been financially affected by the coronavirus. Analysis by Private Finance found that the cost of doing so could quickly mount as interest continued to accrue during any mortgage holiday. A homeowner with a £200,000 mortgage and 20 years remaining on their term would pay an additional £3,935 in interest over the span of the mortgage if they took a six-month payment break, based on a typical standard variable rate of 4.5%. This is the equivalent to adding £47 a month to mortgage repayments once the payment holiday is over.

The Daily Telegraph (12/-6/2020)