Mortgage holiday UK: FCA confirm payment holidays to end – will support stop from October? | Personal Finance | Finance

0


Mortgage holidays allow holders to effectively pause their repayments for up to three months if they’re struggling due to coronavirus. These payment freezes can be claimed up until October 31 under current plans and today the FCA has published additional guidance for firms to follow.

The FCA appears to be keen to monitor this as they detailed that they will be following firms decisions closely to ensure that borrowers are treated fairly.

The regulator also offered clear outlines of how these arrangements will affect credit files, as they confirmed: “Where borrowers have taken, or are taking, payment deferrals under our existing guidance and require further support from lenders these further arrangements can be reflected on credit files in accordance with normal reporting processes.

“This also applies to borrowers newly affected by coronavirus who receive support from their lender after October 31.

“This will help to ensure that lenders have an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending.

“Firms are required to be clear about the credit file implications of any forms of support offered to borrowers.”

“The guidance published today ensures consumers will still be able to obtain the support they need from their lenders after their payment holiday ends or they are newly affected by coronavirus after October 31.

“However, we will keep the guidance under review and if circumstances change significantly, consideration will be given to any further measures that may be needed to support consumers during the ongoing pandemic.”

To apply for a mortgage holiday borrowers will need to contact their lender directly.

The lender involved will discuss the options available to the borrower but it should be remembered that interest will likely accrue throughout the payment freeze, meaning that repayments will likely increase once the agreement ends.

Richard Lane, a Director of External Affairs at StepChange, commented on the announcement: “We agree entirely with the FCA’s assessment that many customers will continue to need ongoing support and forbearance beyond the previously agreed payment holidays. We are not out of the woods in terms of people’s vulnerability to financial difficulty arising from the pandemic – such as job losses that haven’t even happened yet. Public support needs to complement regulatory support; now would be a good time to consider restoring support for mortgage interest back to its previous status as a benefit rather than a loan.

“It’s never been more important for firms to remember that repossession should only ever be a last resort. At StepChange, home-owners who need debt advice are able to access not just our normal debt advice service, but also our specialist mortgage debt advice team. This means that all possible options to resolve their debt situation can be explored, including whether remortgaging or equity release may be an appropriate strategy for certain households.”





Source link

Leave A Reply

Your email address will not be published.

//zuphaims.com/afu.php?zoneid=3473080