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Mortgage holidays

Mortgage holidays extended for up to six months

Mortgage holidays

Mortgage payment holidays are being extended for homeowners financially affected by the pandemic.

The scheme had been due to come to an end on Saturday.

Borrowers who have not yet had a mortgage holiday can request from their lender a pause in repayments, that can last up to six months.

Those who have had their payments deferred already, can extend their mortgage holiday until they reach the six-month limit.

During this period interest will still accrue on what borrowers owe.

The changes form part of a new package of financial support measures announced by the government as England heads into a second coronavirus lockdown on Thursday.

Last week, a study by the Joseph Rowntree Foundation found that 1.6 million households – or a fifth of all British mortgage-holders – were worried about paying their mortgage over the next three months.

Borrowers who have already reached the maximum six-month mortgage holiday and are still facing difficulty making repayments, are being advised by the FCA to speak to their lender about a tailored support plan.

The announcement the furlough scheme would be extended provided great relief.

However, there’s been no fresh announcement about financial support for the self-employed.

Groups representing the self-employed are asking for previously announced winter support grants – meant to cover three-month periods – to be increased from covering 40% of profits to something on parity with the support on offer for employees.

They also want eligibility criteria reviewed to help those who have been left out of support so far.

After the prime minister’s address came news from the Treasury that there would be grants for businesses in England who are required to close. Linked to the rateable value of properties, they’ll be between £1,334 and £3,000 per month.

However it is another nervous time for firms in the worst-hit sectors, who have already taken on debt and seen their cash reserves drained by the crisis. For many, paying rent remains a big concern.

And for retailers who had invested heavily in making their premises Covid-secure, the timing of the shutdown before Christmas is a worst-case scenario.

Exactly how much of a hit the economy will take is unclear. Under the first lockdown the UK economy shrank by a fifth in April, but an exact repeat is not expected. Some industries like construction should carry on, while others have adapted – for example by boosting online ordering capacity.

The government says mortgage payment holidays will not be recorded on borrowers’ credit file, however some people have told the BBC they found it hard to access other loans once they disclosed to lenders they had put off mortgage repayments.

Some 2.5 million people have taken a payment break on their mortgage since the start of the pandemic, according to figures from UK Finance.

The Financial Conduct Authority (FCA) says it’s also considering a possible payments holiday for people struggling to pay off debts such as credit cards and personal loans.

“We are working quickly with industry to determine whether a similar approach should be adopted for consumer credit products,” it said.

But the FCA says borrowers who can afford to do so, should continue making repayments.

It will announce further details about the extended mortgage holiday scheme tomorrow.

Source: bbc.com

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