Hello neighbours,
This is some useful advice for those who have a mortgage - it's come from a
university colleague who is also a registered Independent Financial Adviser.
Keep well,
Fides
------------------------------
*From:* "Pagdin, Ian" <sbfip@xxxxxxxxxxxxxxxxxx>
*Sent:* Thursday, 19 March 2020 10:16
*To:* + SBS All Staff
*Subject:* General Help Message
*Help for those individuals with a mortgage loan*
Please forgive the blanket email, which I believe may be broadly relevant
to many people.
Just a quick email to colleagues in the University, in these uncertain
times, who may have mortgage loans. In addition to me being a member of
staff, I am also an IFA and have some experience in these matters, so I
thought it may be helpful to share some thoughts with you.
You may have heard that UK government have been in discussions with the
lenders in the UK, with regards to helping individuals who may be
struggling to pay their mortgage as a result of the Covid-19 virus.
Arrangements have been put in place to help and there is a plan in place
for lenders to offer a 3 month mortgage holiday to individuals who are
suffering hardship due to the effects of the Covid-19 virus and its impacts
on working arrangements.
https://www.bbc.co.uk/news/uk-51927471
I would urge anyone who is in this position to contact their lender *as
soon as possible* and discuss the individual lender’s arrangements for help
to customers. Don’t just cancel your direct debit without discussing the
situation with the lender first and obtaining precise details of the
procedure to follow.
*The details of the customer services helpline can be found on your
lender’s website.*
For those of you who are tenants or indeed landlords, government has
announced a raft of measures to protect renters and landlords during the
Covid-19 crisis, including extending the three-month mortgage payment
holiday to buy to let investors and stopping evictions.
In “normal” times of individual hardship, (for example redundancy or
long-term debilitating illness) most lenders already have such arrangements
in place; however, what they usually do in these circumstances is to
capitalise the missed payments and add them to the outstanding mortgage
balance. This then results in interest being payable on the increased
balance over the remaining mortgage term. It also results in an increase in
the normal monthly payment on resuming paying the mortgage, as the overall
balance will have increased.
The other issue for potential concern, is that it would also (normally) be
recorded as ‘missed payments’ and in the worst case, a default on the loan,
which may have serious adverse implications for the individuals credit
history in the future, for a period of at least six years.
My suggestion therefore; is that if you find yourself in difficulties
(paying the mortgage) as a result of the Covid-19 virus situation, you
should discuss the situation in detail with your lender or your usual
financial advisor, before taking any drastic action. And also, ask the
relevant questions;
1. What are the exact steps that I must take in my circumstances?
2. Will my missed (payment holiday) payments be capitalised (added to my
outstanding loan balance) and what are the implications of this to me in
the future, in terms of increased monthly cost?
3. Will taking a mortgage holiday in these circumstances affect my
credit history for the future?
This will allow you to make an informed decision and if you are in any
doubt; talk to your existing financial advisor for specific advice on your
circumstances. Remember that it is a regulatory requirement that the
lenders must treat customers sympathetically and consider their individual
circumstances.
I have spoken to the Halifax this morning on the advisor helpline (just
because they are one of the biggest lenders in the UK) and they have
confirmed that lenders will look at each case individually and provide
assistance where it is needed in this emergency. I’m confident that this
will be reflected throughout the industry.
I hope that this has been helpful …..
Kind regards
Ian
*Ian Pagdin ACSI*
*Course Leader MSc Banking & Finance **| **MSc Finance & Investment** | **MSc
Wealth Management** |** Senior Lecturer*
*Sheffield Business School **|** Sheffield Hallam University **|**
Department of Finance, Accounting and Business Systems*
*Stoddart Building **| **City Campus **|** Sheffield **|** S1 1WB*
*(* *0114 225 5555 **|* *** *i.pagdin@xxxxxxxxx <i.pagdin@xxxxxxxxx>*
