Since Covid-19 and quarantine / lockdown began, we’ve become used to the daily briefings by government ministers, with the Chancellor Rishi Sunak making more monetary decisions in a few months than many residents of number 11 make in a parliamentary term.
As a self-employed web designer and copywriter, who’s recently taken retirement at 55 with a teacher pension, I was less interested in furlough and more curious about mortgage arrangements.
I found out quickly enough that I could take a 3 month payment holiday with my SVR rate with NatWest and, being impetuous, clicked submit, to see if one I’d be accepted and secondly what the financial damage would be.
I was accepted for a payment holiday – probably the only holiday I’d go on this year – but was a bit agog when I reached for the calculator to realise that compound interest meant a hefty £1500 in interest on top of the increased payments.
There’s no doubt that this measure will be a life or home saver for so many staff made redundant or furloughed. £26 a month for the extra lifespan of my mortgage seemed reasonable until I looked at it under the cold hard light of logic and my Anglepoise lamp.
I’m no financial expert; I’m no property market guru, but I do have a fascination (morbid perhaps) with anything aligned with bricks and mortar.
I do think though that with mortgages there is an absolute lack of transparency – and not just with payment holidays.
Headline Bank of England rates are incredibly and historically low – but finding these replicated by mortgage advisors (perhaps my naivety is showing) is next to impossible.
By all means, take advantage of a mortgage payment holiday – but do be aware that the banks are taking advantage of you.