Extension on mortgage payment breaks – what do the new rules mean for you?

Extension on mortgage payment breaks – what do the new rules mean for you?

18/11/2020

Earlier in the year, the Financial Conduct Authority (FCA) announced that individuals struggling financially in result of the pandemic, could request up to 6 months of breaks on mortgage payments until 31 October 2020.

After monitoring the ongoing effect that the COVID-19 outbreak is having on consumer finances, the FCA took the decision earlier this month to extend this measure further.

Now, consumers have until 31 March 2021 to request a payment holiday. Mortgage holders are permitted a maximum of 2 payment breaks lasting 6 months in total, meaning:

  • If you have not yet taken a payment break – you may still be able to defer payments for 3-6 months.
  • If you are currently taking your first payment break – you may be eligible for a further deferral of 3 months, bringing your total break to 6 months.
  • If you have taken an initial payment break and resumed normal payments – you may still be eligible for a further 3-month payment break.
  • If you have taken a 6-month payment break already – you can speak to your lender who may be able to provide tailored, short term support based on your circumstances.

The FCA have again confirmed that these payment breaks will not be recorded on credit files, however, they have also flagged there are other ways for future lenders to check if you have taken advantage of this scheme. Some companies may ask to see your bank statements before loaning you funds, and these will show a clear deferral of payments. It is important to note therefore, that this could affect the way you borrow in the future.

On the other hand, any tailored support provided directly from the lender may show on credit files (however this should be raised with you before you proceed down this route).

As with similar measures, this extension will no doubt help tide many over in a challenging period. However, these schemes are designed to be short term in nature and are unlikely to help fix longer term issues with debt. If you are struggling financially, and cannot see an end to this, it is important you contact an experienced adviser. Our friendly team are on hand 6 days a week to answer any questions you may have. It’s our job to make sure you know all the available options, so you can make an informed decision about your future.

To get in touch, call now on 0141 300 5656 or book a call-back below.

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