The UK finds itself in a precarious financial position – and this has affected just about every household across the country. As a result, millions of people have taken out payment holidays to avoid running into arrears.
Under this scheme, you can request a freeze on payments for many products such as mortgages, credit cards, and personal loans – although interest rates should continue as normal. For those in financial difficulty, payment holidays have been a huge help.
Yet, for many lenders, this payment break is scheduled to end in October. As it won’t be long until the payment holiday comes to an end, what can you expect?
Once the payment holiday ends, your lender should be in contact asking how you’re planning to repay the shortfall. If you cannot afford to make repayments, you may be able to extend the payment holiday further. However, this is entirely at the creditor’s discretion.
If you can afford repayments, the lender should come up with a new payment schedule based on your circumstances. This may involve:
Although the amount you’d regularly pay might decline, the length of your policy could increase to recover the shortfall as well as ensure you can repay what you owe. This means, due to interest, you may be paying back more in the long run.
To recover the deficit from the holiday, your lender may increase your monthly payments. If you didn’t have long left on the policy, you may be asked to pay substantially more than you otherwise would have done.
Providing you start making payments again at the end of the holiday, the break shouldn’t negatively impact your credit rating. However, the fact you’ve taken a payment holiday – or received an extension – should still appear on the report. This means lenders will be able to see it.
Your credit rating will probably be harmed if you continue to miss payments once the holiday is over.
If your payment holiday is coming to an end, and you’re worried about making payments, then it’s time to get debt help. The consequences, otherwise, could be extreme. Not making payments on your mortgage – for instance – could result in your home being repossessed.
To find out how we might be able to help, click the button below. We may be able to make life much easier by resolving your unsecured debts through a consolidation loan.