Mortgage freezing impact – What will happen once the freeze period is over?

 Mortgage freezing impact – What will happen once the freeze period is over?

Homeowners have been heavily affected by the coronavirus. Job losses have been high since the coronavirus nearly brought the world to a standstill almost one year ago. In December 2020, the United Kingdom announced that the unemployment rate was at 4.9%. That number didn’t truly reflect the actual number of unemployed as the survey to create the statistic takes months to collect data.

One option that homeowners had to help ease the financial burdens they faced due to coronavirus was a mortgage freeze. Mortgage holidays have been beneficial to homeowners allowing them to keep their home while putting their money to work elsewhere. Mortgage payments are now due to end, however.

When does the mortgage freeze end?

The freezing of mortgages was due to end in October 2020. However, with rates of coronavirus infections increasing across the UK – and in other parts of the world – measures were introduced to extend the mortgage holiday. In the UK, the government has outlined July 2021 as the end point for mortgage holidays. But as we have seen since the COVID-19 pandemic began, things can change.

Another serious rise in infections could see mortgages remain frozen. With over 5.8 million people, and rapidly rising, getting the vaccine in the UK, there is hope that people will be back to work in the summer. It is also hoped that everyone who wants a COVID-19 vaccine in the UK will be administered it by the autumn.

The vaccine and the rates of coronavirus all have a major impact on the mortgage freeze and whether it will be extended once more. As it stands, it will end in July, so homeowners who took out a holiday must be ready.

What happens when the mortgage freeze is over?

Homeowners still experiencing severe financial difficulties can still apply for a mortgage freeze from their lender. However, this can only occur in certain circumstances. As the date for the freeze inches closer, you should contact your mortgage lender. It is important to get in touch with your lender as soon as possible as you may struggle to make future payments.

Once the mortgage freeze comes to an end, your financial lender will recalculate the monthly payments owed. Payments that were deferred during the freeze will be spread over the existing term of your mortgage.

Some homeowners may see a spike in the amount of money they owe each month in mortgage repayments. Others may not notice much change at all. Every case will be different; therefore, you should contact your lender to discuss your situation. Your lender may offer you an alternative that fits into your ability to repay your mortgage.

While a mortgage repayment freeze can help you get by in the short-term, the long-term effects could be detrimental. When freezes were introduced, they were done to keep homeowners’ outgoing bills low. In the end, freezing repayments could have unintended consequences that were not foreseen at the time. One such consequence you may find is that borrowing money from a lender in the future is difficult.

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