Mortgage payment holidays for borrowers struggling as a result of the coronavirus crisis is to be extended by three months under new proposals announced by the government on Friday.
Ministers are also planning to extend the ban on repossessions until the end of October.
Over 1.8m payment holidays have been granted by lenders under the measures that were first announced in March and were due to come to an end in June.
The government says that where borrowers can afford to resume mortgage payments, it is in their best interest to do so, even if they cannot cover the full monthly amount.
All payment holidays must be agreed between borrowers and their lenders in advance of direct debits being reduced or stopped.
In its announcement on Friday, the government emphasised that payment holidays should not have a negative impact on borrowers’ credit files.
However, we would like to warn all our clients that taking a payment break may still hinder your chances of getting credit in the future as lenders may take this into account when carrying out their own credit scoring and affordability checks.
Borrowers who have yet to apply for a payment holiday will be able to do so until October 31.
Mortgage lenders will also be expected to extend support for borrowers who have already asked for a payment holiday, but are still struggling. This could be by extending the payment holiday or by offering reduced payments or interest only.
Lenders are expected to work with customers on the best options available for them, paying particular attention to the needs of vulnerable customers.
Beware! While you are not making your mortgage payments, you do still accrue the interest on the mortgage, which adds up over time. Our advice would always be to pay if you can.
For more information contact us or speak to a mortgage adviser on 01628 507477.
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