At the moment, trying to keep up with the latest news around mortgages seems a daunting task to undertake. So we have decided to take a look at some of the terms used all over the press at the moment to hopefully reassure and clarify what they actually mean. Remember you can contact our team of experts: Caroline, Lyn and Vicky, if you have any questions about your mortgage.
What does "lockdown" actually mean?
You may have seen in the news the term "mortgage lockdown". But what does this mean? Nationwide were the first lender to take this into action by pulling away from most new deals.
Whilst they are continuing to offer home loans to those with 25% equity (or those with a 75% loan to value ratio), this rules out first-time borrowers those with little equity in their home.
This will obviously vary lender to lender, with others opting for 60% LTV (including Barclays, Halifax and Virgin Money).
What this means is that, if you have a 25% or higher equity, you will be able to continue with your deal. This will obviously be a temporary measure
"Mortgage breaks" and "payment holidays"
The term 'payment holiday' paints an image of sitting on a beach, sipping a mojito without a care in the world about your mortgage. What it actually means is completely different…
A payment holiday allows you the flexibility to stop or reduce your payments for up to 3 months, providing much-needed relief for many of us. Be aware though, that the money you would have paid will instead be deferred and spread across the rest of the terms of your loan or your loan be extended to compensate.
Remember to ask your lender about this when contacting them.
Redundancy and Critical Illness Policy
Ensuring that you are protected should the worst happen can provide peace of mind. Accident, Sickness & Unemployment insurance is a short term protection that will replace your income should you be unable to work for up to 12 months.
Another form of protection is Mortgage Payment Protection Insurance (MPPI), which covers the cost of your mortgage payments should an accident, sickness or unemployment prevent you from working.
This was just a brief overview of what is currently going on. Whether you simply want some advice or have decided now is the time to look at switching your mortgage to a better product, contact Lyn Vicky or Caroline on 0800 389 2939