Lenders have granted over 1.6 million mortgage payment holidays to support borrowers facing financial difficulties due to coronavirus, according to UK Finance.

The financial trade body said that one in seven of all mortgages are now covered by payment holidays. For the average mortgage holder, the payment holiday amounts to £755 per month of suspended payments.

Borrowers can switch to better deal

Lenders announced they will also offer product transfers to existing customers who come to the end of a fixed term product while on a payment holiday.

Product transfers are for like-for-like mortgages with the same lender and tend not to require a new affordability assessment, meaning existing borrowers who have been furloughed will also be eligible.

Stephen Jones, UK Finance CEO, said: “The industry has acted quickly to support homeowners through this crisis and has taken decisive steps to ensure that eligible customers on payment holidays due to Covid-19 can opt for the security of fixing their monthly mortgage payments going forward.

“There is a range of support available to mortgage holders concerned about their finances. We would encourage any homeowners impacted by coronavirus to visit their lender’s website in the first instance to find out more information and how to apply.”

Robin Fieth, chief executive of the Building Societies Association (BSA) added: “Lenders are working hard to help in a range of ways and it is right that this now includes the ability for those on a three-month payment holiday to be able to switch onto a new product with their existing lender at the end of a fixed term product should the two events coincide.”

Take advice

It’s important not to rush into either a payment holiday or a product transfer. There could be better options available to you and a mortgage broker can advise you of the right next step.

If you do need a payment holiday, don’t cancel your direct debit before it has been agreed, as this will be counted as a missed payment and could impact your credit file.