Homeowners struggling to pay their mortgage because of coronavirus will be able to extend their repayment holidays by a further three months.
More than 1.8m payment breaks have been taken up since being offered in March, as part of measures designed to ease financial pressure from the Covid-19 outbreak on households.
With many mortgage holidays due to end in June, the government along with the Financial Conduct Authority (FCA) and Bank of England, have said borrowers will be able to extend the break by another three months until September.
However, homeowners who can restart repayments have been encouraged to do so.
The application period for a mortgage holiday will also be extended until 31 October so that customers who have not yet requested a holiday will be able to do so.
And the current ban on repossessions of homes will be continued to the same date.
Not only credit files
As with the previous payment holidays, there will not be a negative impact on credit files.
However, the FCA warned in its statement that “credit files aren’t the only source of information which lenders can use to assess creditworthiness”.
Following a short consultation, the guidance is set to come into force and lenders will be expected to contact their customers whose mortgage holiday is coming to an end.
Borrowers will be able to resume full monthly payments, a proportion of the monthly payment, or temporarily switch to an interest-only mortgage, or extend their mortgage payment holiday in full.
Work with customers
Economic secretary to the Treasury, John Glen said: “We’re doing everything we can to help people with their finances at this difficult time, and that includes making sure people get the support they need with their mortgages. That’s why we’re working with the banks and lenders to extend payment holidays if people need them.
“Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan; but if they are still struggling, I want them to know that help is there.”
Christopher Woolard, interim chief executive at the FCA, added: “Our expectations are clear – anyone who continues to need help should get help from their lender.
“We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.
“Where consumers can afford to re-start mortgage payments, it is in their best interests to do so.
“But where they can’t, a range of further support will be available. People who are struggling and have not had a mortgage payment holiday, will also continue to be able to apply until 31 October.”
Article originally posted by Mortgage Solutions