Published On: Wed, Aug 26th, 2020

Mortgage UK: Further support potentially available for borrowers after payment holidays | Personal Finance | Finance

Mortgage payment holidays were first introduced by the Financial Conduct Authority (FCA) and the government to assist those struggling amid the COVID-19 crisis. The support measure was first introduced in March, with the respite first scheduled to end in June. However, the scheme was later extended to provide further help to those who need it most. 

Now, Britons are able to apply to receive a payment holiday until the end of October, which could prove particularly important amid a recession and potential job crisis as other support measures end. 

But the Financial Conduct Authority (FCA) has now announced proposals which seek to help borrowers during what continues to be a difficult financial time.

Those who are continuing to face payment difficulties after the end of the scheme could be entitled to receive additional support. 

Although the majority of customers are expected to resume their repayments as normal, the FCA has acknowledged many people will still be finding the situation challenging.

READ MORE: Mortgage UK: Completions drop during lockdown – effect on Britons

“However, we understand that borrowers facing payment difficulties because of the pandemic will continue to face uncertainty and may also experience temporary interruptions in income.

“We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track.

“Firms should not take a ‘one size fits all’ approach.”

While widespread mortgage holidays as Britain now knows them will end, the alternative support measure is likely to be welcomed by households who are struggling.

Mark Gordon, director of mortgages at commented on the support measures, stating: “Whilst the initial shock of the pandemic is over, the financial impact of the crisis continues to impact many households across the country.

“Some people may still need help when it comes to mortgage repayments and today’s guidance by the FCA allows lenders to offer a variety of options to assist – whether that be a payment holiday, extending the repayment term, or restructuring the mortgage entirely.

“Importantly, however, the guidance is not another blanket payment holiday extension beyond October 31st.

“The FCA has stated that firms need to be clear about any potential implications this could have on a borrower’s credit file.

“Those who can afford to resume payments should be encouraged to do so, but if you are struggling financially it is important that you speak to your lender.

“Other options, including money management services and debt charities which offer free confidential advice, are also available.”

For those who may be in a bind in terms of mortgage payments, they are encouraged to reach out to their lender.

This is because a formal agreement has to be decided upon, otherwise households risk their break being considered as non-payment.

This could carry with it severe penalties, which could end up affecting a person’s credit score. 

There is no formal consultation being held on the proposals, but comments have been requested on the draft guidance by September 1 at 5pm. 

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