Mortgage payment pauses are back – but a maximum six month period applies
Millions have benefitted from the ability to pause their mortgage payments if they’ve been financially impacted by the pandemic, but the scheme was set to officially end on Saturday.
However, following the latest announcement that the UK will enter a national lockdown on Thursday 5th November, the financial watchdog and lenders have agreed that mortgage payment holidays will continue up to a maximum six months period.
Full details haven’t yet been announced but are expected shortly.
What has the regulator proposed?
If you have not yet had a payment deferral: The Financial Conduct Authority has suggested you should be able to can request one up to a maximum of six months.
If you have had a payment deferral for less than six months: You should be able to extend that deferral to maximum of six months, the regulator has proposed.
If you have already had a six month payment deferral: If you are still experiencing payment difficulties you should speak to their lender to agree tailored support, said the FCA.
Banks and building societies have already agreed with regulators and HM Treasury to extend the provision of mortgage payment deferrals of up to a maximum of six months.
Eric Leenders, managing director of personal finance at UK Finance, said: “Lenders are providing unprecedented levels of support to help customers through the Covid-19 crisis and stand ready to deliver ongoing assistance to those in need.”
Robin Fieth, chief executive of the Building Societies Association (BSA), added: “Building societies and credit unions recognise the financial pressures on some households and will continue to work hard to support customers in the coming months, working closely with the FCA.”
What should you do next?
A further announcement is expected today and the regulator said borrowers should not contact their lender just yet.
Lenders will shortly provide information on what this means for their customers and how to apply for this support.
If you can meet your mortgage payments you will usually be better off doing so, as interest will still accrue while your payments are paused, which means you will end up owing more overall.
If you are unsure a professional mortgage broker will be well placed to talk you through your options.