Further support confirmed for mortgage borrowers impacted by Covid-19

From the outset of this crisis, lenders have offered unprecedented levels of support to mortgage borrowers whose finances have been impacted by Covid-19.

The latest figures from UK Finance highlight that 1.86 million mortgage payment holidays (also known as payment deferrals) have been put in place – equivalent to one in six mortgages. This forms part of a clear plan to support customers through these challenging times, including a moratorium on repossessions, continuing to offer product transfers to existing customers including those on a payment deferral switch to a new deal, and extending mortgage offers to enable homebuyers to move at a later date.

Now as we move onto the next stage of this crisis, lenders are committed to providing ongoing assistance to those borrowers who need it. We therefore support the latest regulatory guidance from the Financial Conduct Authority (FCA), which applies across residential and buy-to-let (BTL) mortgages and enables lenders to provide borrowers nearing the end of their three-month payment deferral with help that best suits their needs.

It will always be in the borrower’s best interests to pay their mortgage if they are able as this will reduce the level of their repayments in the long run, but for those customers who are struggling, help continues to be available. Customers who have not yet applied for a payment deferral and are experiencing financial difficulties due to Covid-19 will still be eligible to apply until 31 October 2020. For those customers that have already taken a payment deferral on their mortgage, firms will offer ongoing support, with options including a full or part payment deferral for a further three months.

Taking a payment deferral is not the right choice for everyone, and borrowers should only apply if they really need one. Customers will still owe the money where a payment deferral has been granted and interest will still accrue.

Borrowers don’t have to choose between making their full regular mortgage payment or taking a payment deferral. There are a range of options available for those customers unable to meet their normal repayments but who could afford to make reduced repayments. These include moving to interest-only payments for a period or extending the term of their mortgage to spread the cost of borrowing. Where possible, borrowers will be able to explore these options online, or they can get in touch with their lender to consider the range of measures available and discuss which one is right for them. We know that not everyone can access digital channels so lenders will make sure that there are other ways to get in touch.

We also support the extension of the involuntary repossession moratorium until 31 October 2020 across residential and buy-to-let to ensure that no one loses the roof over their head because of the impact of Covid-19 on their finances.

Lenders understand that many households are continuing to see their finances squeezed by the impact of the coronavirus pandemic. We want to reassure borrowers that lenders stand ready to provide ongoing support to those who need it. Ultimately, each borrower will have their own specific circumstances, which is why lenders will have a range of options available to find a solution that best suits their needs.

Kindly shared by UK Finance