Mortgage holidays: This calculator will work out how mortgage payments will be affected
Rishi Sunak yesterday put in plans to support the economy, He revealed that £330billion in loans will be available for businesses to support them through these troubling times. This is an unprecedented amount, it is officially the biggest government package made in peacetime.
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However, it wasn’t just business and large institutions that received support.
Individuals who may find that their income falters in the coming weeks can expect support from the government.
In the recent budget, Rishi Sunak revealed that over £1billion would be spent on supporting the financial wellbeing of vulnerable people.
Yesterday, the Chancellor of the Exchequer added to that support.
The support will primarily be focused on mortgage payments.
As Rishi explained: “Following discussions with industry today, I can announce that for those in difficulty due to coronavirus, mortgage lenders will offer at least a three month mortgage holiday – so that people will not have to pay a penny towards their mortgage while they get back on their feet.
“And in the coming days, I will go much further to support people’s financial security.
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“In particular, I will work with trade unions and business groups to urgently develop new forms of employment support to help protect people’s jobs and incomes through this period.”
While many welcomed these developments some have noted that there has been little detail on how this will work in practice.
Samantha Short, the co-founder and CEO of Moneyed, attempted to understand this new dynamic but she faced some hurdles.
As she commented: “I couldn’t find any information that helped people to understand the impact of taking a holiday on their future monthly payments and total amount repaid, so I made a simple calculator”
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This calculator will help people understand how their payments will change if they take use these mortgage holiday allowances.
The tool only requires a relatively small amount of information.
To start with, the user will need to enter the initial mortgage value along with its fixed interest rate.
The term in years will then need to be entered along with the date that the mortgage was taken out. (an exact date will not be required, it just needs the month and year.)
Finally, the usual payment day will be needed and the length of payment holiday in months. This will obviously be either one, two or three months based on the current rules.
Once all this information has been entered, the calculator will display a table.
This table has details on what the payments will be before and after the holiday is taken. There is also information provided below this table.
Here there are explanations on what a mortgage payment holiday actually entails, what the impact will be on the total size of the mortgage and more detailed information on how the calculator works.
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