What happens when payment holidays end on 31st October?
The Financial Conduct Authority has put in place a package of support for people in difficulty to ensure help is available after 31st October 2020, when mortgage payment holidays end.
The regulator urged those struggling to make repayments due to the impact of coronavirus, to speak to their lender about options available to them.
Help is still available from lenders if you are finding it hard to keep up with payments and, if you’re having trouble managing debts, you can get free advice.
Sheldon Mills, interim executive director of strategy and competition, said: ‘We want to remind consumers, especially those who are newly in financial difficulty, that lenders are able to provide you with support. There are options available to you.”
What support is available?
Support for mortgage borrowers will be available to those who have already taken a payment deferral and those who are newly in financial difficulty.
The regulator said mortgage lenders should be flexible and offer a range of options, tailored to reflect customers’ individual circumstances.
UK Finance, which represents mortgage lenders, reiterated that lenders will offer a range of options to support borrowers who face financial difficulty, which might include:
- Extending the length of the mortgage term
- Changing the type of mortgage (e.g. a temporary change to an interest-only mortgage)
- Deferring payment of the interest or the sums due
- Capitalising the interest accrued, (i.e. adding the added interest owed to the balance of the loan).
Miles Robinson, head of mortgages at mortgage broker Trussle, said: “It’s clear that mortgage payment holidays have proved a vital lifeline for some homeowners who have suffered financially as a result of the coronavirus pandemic.
“However, while it’s important for people to be aware that there will be support available beyond October, we’d urge homeowners to speak to their broker or lender to explore their options before making a decision.”