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What happens when your payment holiday ends?

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New guidance has been issued to lenders about how they should support borrowers coming to the end of their agreed pause in payments
What happens when your payment holiday ends?

The Financial Conduct Authority (FCA) has said mortgage borrowers will still receive help from lenders if they continue to face payment difficulties due to coronavirus.

The regulator wants to make sure that you will continue to get the support you need if you still face financial difficulties at the end of your payment holiday.

Under current guidance payment holidays are set to end on 31st October 2020.

What does the new guidance say?

Lenders will be expected to offer further short and longer-term support, reflecting the circumstances of their customers.

This could include:

  • Extending your repayment term
  • Restructuring the mortgage
  • Reducing your repayments
  • Offering a further pause in repayments.

Mortgage firms will be expected to prioritise support for borrowers who are at most risk of harm, or who face the greatest financial difficulties. And the FCA said it will monitor lenders to ensure borrowers are being treated fairly.

Christopher Woolard, interim chief executive at the FCA, said: “Some consumers will continue to be impacted by coronavirus in the coming months, or be impacted for the first time. Consumers in these situations will benefit from firms providing them with tailored support.

“However, it is very important that consumers who can afford to resume mortgage payments should do so for their own long-term interests and so that help can be targeted at those most in need.”

Eric Leenders, managing director of personal finance at UK Finance, added: “Lenders understand that many households will continue to see their finances squeezed as the pandemic continues and will be offering a range of support for those who need it. It is essential that customers speak with their lender to discuss the best solution for them.

“Firms will be communicating with customers whose mortgage payment deferral is coming to an end to discuss the options available.”

Further support will affect your credit file

After 31st October, your credit file will now show if you have taken, or are taking, payment deferrals or further support from lenders.

This also applies to borrowers newly affected by coronavirus who receive support from their lender after 31st October.

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