That is according to new guidance published by the financial watchdog, the Financial Conduct Authority (FCA), on the measures being taken to help borrowers during the Covid-19 pandemic.
It also said lenders must ensure there were no additional fees or charges – other than any additional interest built up during the payment holiday.
And it offered reassurance that, under current circumstances, repossessions would not take place unless a customer agreed it was in their best interest.
With regard to the payment holidays the FCA clarified mortgage customers could ask for a payment holiday for an initial period of three months, if they are experiencing payment difficulties as a result of Covid-19.
It would review this guidance over the next months and could extend the period of payment holiday if appropriate.
Christopher Woolard, the interim chief executive of the FCA, said: “We want firms to support consumers during these unprecedented times.
“Our mortgage guidance underpins the actions taken by mortgage providers and will give confidence to both consumers and firms.
“In particular, we are making it clear that no responsible lender should be considering repossession as an appropriate measure at this time.”
Warning
Although the measures will provide relief for borrowers, industry experts are warning this could pose problems further down the line.
Dave Miller, client account manager at mortgage broker Spicerhaart Corporate Sales, said: “While extending mortgage holidays may be welcomed by consumers in the short term, there is a real risk that it is storing up trouble for the future.
“It will add to the interest burden once the holiday period is over and that will place some borrowers under real strain, especially those that were already struggling with arrears prior to the current crisis.
“We’ve all had that back-to-work feeling after a long holiday. For borrowers enjoying an extended mortgage holiday, this could be much worse than that.”
Lenders have been advised by the FCA to ensure all customers are aware of the impact of taking a mortgage holiday. They should, the regulator said, provide adequate information to understand the implications of a payment holiday, including the consequences for the total amount payable, the mortgage term and the monthly instalments.
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My mortgage provider offered me a 1 month holiday then went through my income and expenditures. Then said I couldn’t have that either. As we are £408.10 in arrears and failed our payment plan. I told them my husband is self employed and won’t receive any money till June at the earliest. They still said no.
The government says people in arrears should not be treated any differently to those who are up to date with payments
Will this extend my fixed fee period as i have an early repayment charge which runs until June 2023 but my house has to be sold in June 2023 under a Financial Dispute Resolution following divorce? or is it just interest that is accrued
My lender has offered a 3 month mortgage holiday but I am worried that it will need to be paid back through a monthly increase. I may not get my job back any time soon due to the current situation and may need to extend the holiday again. I was also looking to market my property for sale as my child maintenance will reduce in Sept when my eldest child officially leaves full time education but looks like there is a stop on the property market. So then not only will I not be able to afford my mortgage but won’t have enough money for my cost of living and household income also.
You could ask your lender if they could extend the term of your mortgage in order to keep the monthly payments the same or even a bit less. This would in the long run make your mortgage more expensive overall.
I have a morgage offer till Aug 2020 when my new build would have been ready with the closure of the building sites this will now not be happening am I entitled to an extension on my morgage promise
At the moment lenders can offer a three month extension on the mortgage offer.
I have an Interest Only Mortgage due to end in September 2020 – will a 3 month payment holiday extend the expiry date to December 2020, or just add the holiday payments to the balance outstanding in September?
It depends on what is agreed with your lender
I emailed NatWest re payment holiday 3
Months within the week they granted it no questions no fuss and no questions – why cannot all lenders be like that!!! No paperwork no stress !