One in six mortgages are now covered by a payment holiday amounting to more than 1.8 million home loans but they will cost borrowers more money.
While a three month payment holiday only adds on average £11.21 per month to a mortgage, the debt builds up over time and could add £665.08 to a mortgage.
This is according to new figures from comparison website money.co.uk and its mortgage technology partner Koodoo.
On average, homeowners looking for help with their mortgage payments have an outstanding loan of £136,000.
Taking a three-month mortgage holiday would see their regular monthly payments rise by £11.21 to £720.22 and based on an average 21-year term and an interest rate of 2.72%, this would cost an additional £665.08.
At the time of the analysis homeowners could take a maximum three month mortgage holiday and the vast majority (89%) of homeowners were opting for this, over the shorter term breaks of one or two months..
With the scheme now extended to six months, the personal finance experts at money.co.uk crunched the numbers and calculated that taking the additional three month mortgage holiday, could add an extra £1,331.95 (£22.70 per month) to the full amount owed.
Salman Haqqi, personal finance expert at money.co.uk, said “Mortgage holidays have proved to be a lifeline for millions of homeowners, who would have otherwise struggled to meet their payments and may have faced losing their homes.
“However, our findings show that payment holidays should be a short term fix. It’s important to remember that you will still owe the money and interest will continue to accrue while the deferred payments remain unpaid.
“And in most cases when a customer takes a three month payment holiday in a 21 year or 252 month mortgage, the end date of the mortgage doesn’t get automatically extended, so the customer now needs to pay back the mortgage in 249 months.
“As the nation gradually starts to open for business and furloughed workers are brought back, restarting mortgage payments should be a priority. And, if you are still able to make your payments in full, you should continue to do so.”
