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MORTGAGE ‘PAYMENT HOLIDAYS’

MORTGAGE ‘PAYMENT HOLIDAYS’

The Financial Conduct Authority (FCA) has confirmed the support that lending firms should give to mortgage customers who are either coming to the end of a payment holiday or who are yet to request one.

The FCA is also reminding customers that if they can afford to resume payments, they should.

For customers still experiencing temporary payment difficulties due to Covid-19, lenders will offer support, with options including a full or part payment holiday, for a further three months.

Customers yet to apply for a payment holiday have until 31st October to do so.

The FCA has confirmed:

  • Customers that have not yet had a payment holiday and who experience financial difficulty have until 31st October to request one.
  • The current ban on lender repossessions of homes will be continued to 31st October. This will ensure that people are able to comply with the Government’s policy to self-isolate if they need to.
  • Lenders will communicate with customers regarding what happens when their payment holiday ends. They should offer a range of options for how the missed payments will be repaid, if they are able to resume payments.
  • Lenders will continue to support customers who have already had a payment holiday where they need further help. Lenders will contact their customers to find out what they can repay and, for those who remain in temporary financial difficulty, offer further support, which will include the option of a further three-month full or part payment holiday.
  • Payment holidays offered under this guidance will not have a negative impact on credit files. However, consumers should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.

Depending on the customer’s circumstances, firms may make them aware of self-help steps a customer may take or signpost customers towards sources of debt advice.

This will be for anyone concerned about managing their money during Coronavirus crisis and who wants to find out what steps to take to get back on track.

When implementing this guidance, lending firms will be particularly aware of the needs of their vulnerable customers and consider how they engage with them.

For customers who aren’t able to use online services (such as digital channels), firms should make it easy for customers to access alternatives.

This guidance came in to force on 4th June 2020 and only applies to mortgages.

It does not apply to consumer credit products which are covered by separate guidance, which will be updated by the FCA in due course and which we will publicise once received.