Hargreaves Lansdown – what to do now mortgage payment holidays are ending

Sarah Coles is personal finance analyst at Hargreaves Lansdown

The mortgage holiday season is drawing to a close.

If you’ve taken advantage of one or more mortgage holidays, and your circumstances aren’t set to change any time soon, the 31 October deadline will have been looming large. Today’s announcement doesn’t provide any straightforward answers – because there will be no more blanket mortgage holidays. It means borrowers need to take action well before the deadline.

Huge numbers of borrowers will already have cut their spending dramatically, but if you’ve been hoping to borrow your way through the crisis or hang onto some luxuries, now is the time to draw up a budget and make some difficult decisions. Even if you can only afford partial repayments, something is better than nothing. If you’ve done all the hard work, and there’s still no way to pay the bills, you need some help. You can talk to someone at Citizens Advice or StepChange to get free and impartial advice on your options.

The mortgage company should offer some support too. They’ll have to get in touch before the payment holiday ends, in order to agree the best way to return to payments. Some people will be ready for long-term solutions – like extending the mortgage or restructuring it. If you can’t commit to this (or you commit and then your circumstances change), lenders should offer more short-term help – including delaying payments.

However, if you opt for more delays, you need to be aware that this will impact your credit report, which will detail missed payments. This could make it much harder to borrow or remortgage in future.

As ever in this crisis, none of this is written in stone. The FCA said that if the ‘wider situation’ changes, and people need a different approach, it will review its plans. This may not be the last we see of the mortgage holiday after all.