The Association of Mortgage Intermediaries (AMI) has warned consumers who are taking a payment holiday or have been furloughed, and are eligible for a product transfer, should take advice to understand the options available to them.
Lenders are currently waiving the rule that customers on payment holidays do not qualify for a transfer to a new product within their range, due to the coronavirus.
This comes after the government announced last month that homeowners who were up-to-date on their mortgage payments could apply for a three-month payment holiday to help them through the crisis.
According to UK Finance, as of April 24, 1.6m payment holidays have been granted to mortgage holders.
But the AMI warned borrowers “should not be led to think that [a product transfer] is the only solution” and raised the question of whether a transfer is in every customer's best interests.
The trade association said it “fully endorses” UK Finance’s statement that advice is widely available from mortgage brokers and lenders “for those who want help selecting the right product for them".
Robert Sinclair, chief executive of AMI, said: “Whilst this support for consumers is positive and avoids the consumer falling onto a lender’s SVR, it is inward-looking as it makes no consideration as to whether the deals offered are appropriate.
"Some customers may find that if they revoke their mortgage payment holiday and re-mortgage, it could result in a more suitable outcome. They also may not be aware of how a specific deal compares to others in the marketplace.
"As a result of Covid-19 many more consumers may be vulnerable, so it is vitally important that they explore their options. Whilst a product transfer may seem the most straightforward option, consumers should talk to a mortgage broker as they are well placed to assess individual circumstances”.
Carl Shave, director at Just Mortgage Brokers, said mortgage providers and customers are having to adapt to “a very different financial environment” during the coronavirus.
He said: “Lenders have reacted positively to the needs of customers in regard to payment holidays and many have moved swiftly to accommodate the ability to allow a product transfer during the holiday period. For these measures they have to be applauded.
“Borrowers must however be made aware of all of their options when looking ahead in respect to their mortgage rate together with their monthly payments, and need to be informed of their choices.
“Good, open and honest advice from brokers and lenders alike has always been hugely important but never more than when we find ourselves in uncharted waters such as now. This message must be brought to the fore to ensure consumers are not blindsided by blanket statements that for some can be easily misinterpreted.”