04 Nov FCA Payment Holiday Extension
The Financial Conduct Authority (FCA) has outlined its proposals to bolster support for borrowers struggling with the financial impact of the Covid-19 pandemic.
The FCA recently put forward new proposals to extend the availability of mortgage payment holidays and ban repossessions until 31 January 2021. Earlier this week, the watchdog announced plans to extend payment holidays for credit cards, car finance, personal loans and pawnbroking as England prepares to enter a fresh national lockdown tomorrow (5/11/20).
This support is designed for borrowers who are experiencing payment difficulties because of coronavirus and should only be taken as a last resort.
Who can apply for a mortgage payment holiday?
At the moment 162,000 mortgage payment deferrals are in place, down from a peak of 1.8 million in June.
If borrowers have not taken a payment holiday yet they can apply for up to two deferrals of up to six months in total. For those who have taken one payment deferral, they will be eligible for a second one of up to three months. This includes anyone who has resumed repayments after the first payment holiday. Under the FCA’s proposals, borrowers would have until 31 January 2021 to request a payment deferral.
A payment deferral would not be reported as missed payments on a borrower’s credit file. But this does not mean that consumers’ ability to access credit will be unaffected in future, as lenders may take into account a range of information when making lending decisions.
Who cannot apply for a mortgage payment holiday?
Borrowers who have already had two payment deferrals of up to six months in total will not be able to take any more and should speak to their lender about tailored support.
If customers have agreed alternative support with their lender, they are also not able to apply.
Tailored support may be reported on a borrower’s credit file and lenders should inform borrowers where this will be the case. If you’re not sure, please seek financial advice.
FCA working with lenders
“We recognise the challenges that many consumers face as the coronavirus crisis develops, and we are working to ensure support remains available to consumers who need it,” said Sheldon Mills, the FCA’s interim executive director of strategy and competition. The final guidance will be published as soon as possible.
Never before have mortgage rules been so confusing – yet financial advice so critical as it is today. An expert mortgage broker will be able to guide you through the options for you and your circumstances.
For advice on the right mortgage to suit your personal circumstances, please contact the team at Howard Mortgages on 01803 554455 or contact us here.
Your home may be repossessed if you do not keep up repayments on your mortgage.