Considering a Coronavirus mortgage payment holiday - could a switch to interest-only help?

Nationwide Building Society has recently launched an interest-only mortgage after an eight-year gap in the market. The Society now joins most high street banks that already offer interest-free mortgages. The timing of this launch comes as more and more borrowers look to use mortgage payment holidays as they struggle with their finances during the Coronavirus pandemic.
Interest-only mortgages could provide an alternative approach to reducing monthly outgoings in the short-term. This is because each month the borrower only pays the interest accrued on the amount borrowed. With a repayment mortgage (the one most borrowers are usually offered) the borrower pays for both an element of the amount borrowed and the interest.
However, borrowers need to be mindful that interest only mortgages will cost more over the term of their mortgage because the interest cost doesn’t reduce over time. Borrowers also need to have a way to pay back the total borrowing at the end of the mortgage term or they could lose their home.
Those who decide to use an interest-only mortgage to reduce their outgoings due to financial distress should look to move back to a repayment mortgage as soon as their finances return to full health.

Nationwide Building Society is offering a rate of 1.29% on a variable rate remortgage of two years up to a 60% loan-to-value (LTV). There is a product fee of £999 to secure the mortgage. Once the deal period is over the rate will revert to 3.59%. Borrowers wanting this deal will need to have at least £200,000 equity in their home, with those in the south east and London requiring more at £250,000 and £300,000 respectively. To get this mortgage borrowers will need to speak to a mortgage broker.

The most competitive interest-only mortgages available for a remortgage at 60% LTV is available from Lloyds Bank. The bank is offering a rate of 1.24% fixed until 31 May 2022, after which the rate reverts to 3.59%. There is a £999 fee and £200 cashback available.

Scottish Widows has an interest only remortgage at 60% LTV at 1.25% fixed until 31 May 2022. After this period the rate will revert to 4.24%. This mortgage also has a £999 product fee and comes with £300 cashback.

Interest-only mortgages have the same affordability rules as other repayment mortgages, however as the amount needed to pay each month is lower this may help to improve the affordability result.
Despite recent reductions in the number of mortgage products available, there are currently 607 interest-only remortgages available at 60%.