Only those borrowers who have not benefited from a full six months mortgage holiday before will be eligible for the additional support which was announced today by the Financial Conduct Authority (FCA).
Anyone who takes a payment deferral – which is the technical term for mortgage holiday – will not have this recorded as a missed payment on their credit file provided they have agreed the arrangement with their lender.
The FCA also confirmed no one should have their home repossessed without their agreement until after 31 January 2021.
Lenders are being urged to offer ‘tailored support’ to borrowers in difficulty and this may include deferring payments. However, where possible, most households are being encouraged to make payments.
Under the new guidance published today people who have not yet had a payment deferral will be eligible for payment deferrals of six months in total.
Those who currently have a payment deferral will be eligible to top up to six months in total.
What’s more, those who had payment deferrals of less than six months will be able to top up, as long as total deferrals don’t exceed six months. This includes those receiving tailored support and those who are behind on payments.
Think carefully
Gemma Harle, managing director of Quilter’s network advice business, said welcomed the news. She said: “For many borrowers this winter period might have looked bleak to say the least and this news coupled with the positive news about a slew of effective vaccines for Covid-19 could represent a glimmer of light at the end of the tunnel.
“However, anyone thinking about taking advantage of a holiday should think very carefully about doing so.
“Mortgages are often the biggest single piece of debt anyone takes on in their life and it is important to make sure that any decision works both for the short and long term if possible.
“Extending the term of a loan means it will cost more over the lifetime of the product, so it is a decision that requires careful thought.
“For most people it will only be the right move if they face imminent financial difficulty and it is always worth if possible, discussing your options with a professional.”
The advice to anyone with concerns about meeting their mortgage repayments is to contact your lender to discuss options.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “If you are able to keep paying it will be in your best long-term interest to do so. Payment deferrals should only be taken when absolutely necessary.”
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