Mortgage 12-month grace period: what’s in it for you?
None of these UK mortgage payment shock solutions deal with the underlying problem and they actually make the problem worst.
A 12 month grace period won’t solve the problem and assuming interest accrues during the grace period borrowers are worse off. Neither borrower income nor integrates are likely to change much, hence the grace period is mostly lilely postponing the inevitable.
Further, interest-only and term extensions lower current payments but add to overall debt burden.
Borrowers who refinance their mortgage (and in the UK refinancing is far cheaper than having the loan reset to an adjustable market – standard variable rate) will be locked in for the duration owing to steep prepayment penalties.
These solutions are pretend fixes and worse than letting the problem run its natural course.