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Mortgage payment holiday extended by three months

Paloma Kubiak
Written By:
Paloma Kubiak

Borrowers suffering financially as a result of coronavirus will be able to extend their mortgage payment holiday by another three months, the City watchdog has confirmed.

Homeowners who are coming to the end of a mortgage payment holiday will be able to request the support for an additional three months, the Financial Conduct Authority (FCA) has confirmed.

The extended guidance comes into force on Thursday 4 June.

Customers who are yet to apply for a payment holiday but are struggling to pay their mortgage due to the health pandemic will have until 31 October 2020 to do so.

The FCA said firms will need to communicate with customers about what happens when their payment holiday ends, and they should offer a range of options for customers to repay the missed payments, if they’re able to resume them.

It added that mortgage payment holidays will not have a negative impact on credit files, but lenders may use information from other sources to form part of their lending decisions.

The financial watchdog also confirmed that the current ban on lender repossessions of homes will remain in force until 31 October 2020.

Christopher Woolard, interim chief executive at the FCA, said: “The measures we have confirmed today will mean anyone who needs to can get help from their lender, if they are still struggling to pay their mortgage due to coronavirus.

“It is important that if a consumer can afford to re-start mortgage payments, it is in their best interests to do so. Customers should talk to their firm about the best option available for them.”

Chancellor Rishi Sunak announced on 17 March that mortgage lenders would provide customers with three months of payment holidays in a bid to support financial security amid the coronavirus pandemic.

It was reported a fortnight ago that Sunak was considering extending the scheme and on 22 May, the FCA announced plans to continue support for customers struggling to pay their mortgage due to coronavirus.