New mortgage rules have been confirmed by the Financial Conduct Authority – extending mortgage holidays to as late as 31 July 2021.
However, not everyone will be eligible, with people who have already taken a 6 month break from payments forced to apply for “tailored support” from their lender instead.
Sheldon Mills, FCA interim executive director, said: “Today we have confirmed further support for borrowers struggling financially as a result of coronavirus.
“The announcement we have made today, ensures that the support offered through payment deferrals is as flexible and accessible as possible.
“This means borrowers will again be able to access payment deferrals up to a maximum of 6 months.
“However, 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.”
The new rules mean struggling borrowers have until 31 March 2021 to apply for a mortgage holiday.
After that date, they will be able to extend existing deferrals to 31 July 2021, the FCA said, provided these extensions cover consecutive payments don’t exceed 6 months in total.
Borrowers who haven’t yet taken a deferral yet – but think they need the full 6 months – should apply in good time before their February 2021 payment is due, the FCA added.
Borrowers with interest only or part-and-part mortgages affected by the crisis can also delay the repayment of the capital on their mortgage until 31 October 2021.
Payment deferrals don’t stop interest building up, meaning your overall debt will rise as a result of taking one.
But holidays will not be reported as missed payments on a borrower’s credit file, the FCA confirmed.
However, people moving on to tailored support packages from lenders at the end of their mortgage payment holiday will see this reflected on their credit files.
The FCA added that you should keep up with payments on your mortgage if you can afford to, and only seek support when absolutely necessary.
The banking regulator also explained exactly who will and won’t be able to access payment deferrals.
- Those who have not yet had a payment deferral will be eligible for payment deferrals of 6 months in total
- Those who currently have a payment deferral will be eligible to top up to 6 months in total
- Those who have previously had payment deferrals of less than 6 months will be able to top up, as long as total deferrals don’t exceed 6 months. This includes those receiving tailored support and those who are behind on payments
- Borrowers who have already had 6 months of payment deferrals will not be eligible for a further payment deferral. Firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments