HOMEOWNERS struggling due to the coronavirus crisis will be able to get help in the form of a mortgage payments holiday.
The holidays will be available for any household that hasn’t already had a payment deferral.
Struggling consumers will be able to apply for six-month mortgage payment holidays[/caption]
If you’re on a payment holiday at the moment, and it was due to last for fewer than six months, you’ll also be allowed to extend it.
The rules allowing people to apply for mortgage holidays were due to stop yesterday, but as the UK heads for a new lockdown the scheme has been extended.
Normally missing mortgage payments or applying for a break spells bad news for your credit rating.
But if you take a holiday due to coronavirus, it won’t be recorded on your credit file, so it won’t affect your score.
The rules haven’t been finalised yet, but the Financial Conduct Authority (FCA) is suggesting the mortgage breaks could be available for six months.
The financial watchdog is due to announce the new guidelines in full tomorrow.
A spokesperson said: “We will work with trade bodies and lenders on how to implement this as quickly as possible, and will make a further announcement on November 2.”
If you want to take a mortgage payment holiday you’ll have to wait until the new rules are in place, which means you should hold off on contacting your lender for the time being.
Mortgage borrowers who have already benefitted from a six month payment deferral and are still experiencing payment difficulties should speak to their lender to agree tailored support.
Taking a mortgage holiday should be a last resort, so you should only ask for one if you really need it.
Interest will continue to accrue during the holiday, which means you’ll owe more money on your mortgage overall.
In fact, taking a mortgage payment holiday because of coronavirus could cost you £2,769 in higher repayments.
However, it could be a lifeline for consumers who are struggling financially as a result of the pandemic.
The FCA has said that it is considering a similar approach for consumer credit agreements such as loans and other forms of borrowing.