The FCA has confirmed that they will offer a second round of mortgage payment holidays, continuing to help those homeowners who may have been financially implicated during covid-19.
Around 1.8 million households used a mortgage payment holiday for three months from the start of thelockdown period, as a way of offsetting any financial uncertainty or loss of income due to unemployment.
In total, around 20% of the UK’s population benefitted from the mortgage holiday scheme, giving the average household a saving of £755. The FCA also introduced a similar scheme for other kinds of credit and financial products including personal loans, credit cards, car loans and an interest-free overdraft facility.
Residential homeowners and those who offer buy-to-let have until 31st October 2020 to apply through their bank or mortgage provider. The process is usually completely online, streamlined and fast-tracked, offering almost instant approval, with no evidence of financial hardship needed or affordability checks.The Financial Conduct Authority’s interim chief executive, Christopher Woolard said upon issuing a further three-month scheme:
“Clearly, if there are further restrictions that need to be placed for health reasons; if the situation becomes
more complicated in some way, then we’ll have to think about how we adjust to those circumstances.”
However, Woolard expressed his belief that half of the people who used the initial mortgage payment
holiday from March to May were now able to pay.
“About half of that group are people who perhaps thought they were going to lose a job or have some other kind of impact, and in fact they’re in a position where they could still afford to pay now that that ninety-day period is coming to an end.”
Woolard emphasised that while lenders suffered the burden in the short-term, borrowers will feel the effects when it catches up in the longer term through extended mortgages and rolled-up interest.
“It’s everyone’s best interest to actually get back towards payment wherever that is possible or even partial payment, but we have to recognise that there’s an ongoing situation here,” he said.
Homeowners get access to a three-month mortgage holiday, whereby payments are deferred until a later today or carried onto the end of the mortgage term. Applying or using a mortgage holiday through the Government’s scheme will not impact your credit score or ability to access finance from elsewhere.
During the coronavirus period, the Government and FCA have also confirmed that no repossessions by mortgage lenders or banks will take place, giving property owners breathing space if they need it.