With the economy in turmoil due to the uncertainty imposed by the pandemic, the loan market has been difficult. For consumers, 2020 has proved a challenging year within which to obtain a loan from a broker or long term lender, and it’s left many current and hopeful homeowners unsure of how to react. For the lenders themselves, stringent government restrictions occur and are changed with little notice.
Today we are having a brief look at current rules and pros and cons around mortgages and payment holidays.
What’s going on with mortgage payment holidays?
After a period of confusion and uncertainty for homeowners and the industry itself, March saw the Financial Conduct Authority at last release guidance on how to take a three month payment holiday for mortgages in the UK.
Banks have also entered into an agreement with the government wherein they will help their clients with support that is individually suited to their ability to repay. There are many ways in which this is expected to be provided, although it will vary from institution to institution. Look for benefits such as a longer-term on your mortgage or a notification regarding a temporary reduction to how much you pay each month.
These are all designed to help give a small measure of relief to borrowers during this uniquely difficult time in our country’s history.
New guidance for borrowers
Fortunately, we’ve just recently had new help from the government. The FCA has now released official new documents that are aimed to help individuals who have struggled to pay in some form due to financial difficulties caused by the pandemic.
Most importantly, homeowners in the UK may be able to request a payment holiday, helping them by pausing those financial obligations for up to six months. As long as it’s your first time applying for a holiday since COVID-19 spread to the UK, you’re free to make your application for a payment holiday.
The lock is ticking, though! Make sure you get your request processed well before the window closes on the 31st March next year. You might also come into difficulties in your application if you happen to have had deferrals already applied to your account – be sure to check.
The most important thing to keep in mind here is simple: if you’re up to date on your mortgage in terms of payments, you should be able to apply for a payment holiday of up to six months. The scheme also extends to any buy to let landlords who are also in some form of difficulty due to cashflow disruption relating to the pandemic.
We recommend any reader to contact their mortgage provider directly to enquire as to what is changing and available. Even if you aren’t in immediate need, you may discover new opportunities that could translate to a better deal for you at the moment or in the years ahead. We wish you the best of luck and good health! Stay safe out there!