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Coronavirus: Mortgage payment holidays extended by three months

The mortgage payment holiday scheme has been extended by three months, the government has announced.

The scheme was brought in to help homeowners who found themselves in financial difficulty due to coronavirus.

The COVID-19 pandemic, which has killed more than 36,000 people in the UK, has seen many business forced to close, resulting in job losses for some and furlough for many others.

More than 1.8 million mortgage payment holidays have been taken up since the scheme was launched in March.

The first of those holidays was due to end in June, but they can now be extended for three months.

The application deadline will also be moved to the end of October.

The extension also applies to a ban on repossessions of homes by lenders.

John Glen, economic secretary to the Treasury, said: “Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan.

“But if they are still struggling, I want them to know that help is there.”

A mortgage holiday is only a temporary measure, as interest continues to build unless a lender agrees otherwise.

The borrower will still owe the outstanding debt and this may mean needing to extend the mortgage term if they want payments to remain at their pre-pandemic level.

Laura Suter, personal finance analyst at investment platform AJ Bell, said the extension would be a “welcome relief” for those struggling.

But she added: “Based on the average mortgage in the country, UK banks were already set to make more than £800m more in additional interest by people taking a mortgage holiday and that will leap up now the period has been extended.

“While the break in payments will be a lifeline for some people, they should research all the options first, including extending their term to reduce monthly payments, seeing if they can switch to a lower rate or switching to interest-only for a period.”

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