Martin Lewis on why a mortgage holiday could be a ‘no brainer’ – but is it right for you?

The impact of the coronavirus UK epidemic is not only having a devastating impact on people’s health, but much of the population will have been affected financially too. During these unprecedented times, Money Saving Expert founder Martin Lewis has been answering questions from concerned members of the public.


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Today, he appeared on the BBC radio show 5 Live Breakfast.

During the segment, a caller asked about the mortgage holiday option for those affected by coronavirus.

It came as presenter Nicky Campbell explained that many homeowners have expressed concerns that they could encounter issues further down the line.

Explaining what applying for a break in payments from the lender means, Mr Lewis replied: “It’s a mortgage payment holiday – you apply to have a payment holiday and that means you do not have to make your mortgage payments for three months.”

He went on to put this into context, giving the example of a person who has 20 years left on their mortgage term when they apply for the mortgage payment holiday.

The financial journalist explained that at the end of the three months, the term remaining would be 19 years and nine months.


“You will have to pay all that you would have paid and the interest accrued over those three months over the 19 years and nine months,” he said.

While conceeding that this situation may sound scary to borrowers, he went on to explain what it means in practice.

“If you had a £700 a month mortgage – that’s how much you’re paying now. You put a three-month mortgage holiday and you had 20 years left at the start of that three months, your mortgage payments would increase from roughly (and it depends on your mortgage rates – give me wriggle room) but roughly £700 a month to £712 a month for the remainder of your mortgage.

“So, to get that cash flow gain now, you’ll be paying £12 a month more for the rest of your mortgage period.”

So, is getting a mortgage holiday the right move for everybody?

Mr Lewis pointed out that for some people who have been hit by coronavirus, the short-term freeze on outgoings for mortgage payments may be of benefit – although that’s not to say it would be for everyone.


  • Mortgage lenders to offer extension for home movers hit by coronavirus

“For most people who are in emergency and need those funds, that means this is a ‘no brainer’,” he said.

“The immediate impact of the cash flow being reduced now easily easily outweighs having to pay £12 more a month on £700.

“Obviously, the shorter your mortgage and the higher your interest rate, the bigger the gap.”

Elsewhere in corononavirus news, in the past two weeks during the coronavirus crisis, 950,000 people have applied for Universal Credit – up from around 100,000 in a normal two-week period.

Around a quarter, 70,000 of applicants of around 270,000 applications in one work, applied for an advance payment.

The DWP has said that around 10,000 existing staff are being moved to process new claims.

Amid the unprecedentaded demand, those looking to put in a claim for Universal Credit or Employment and Support Allowance are being told they should apply online.

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