Sheldon Mills, interim executive director of the FCA, said: “Today we confirmed additional support for borrowers in financial difficulty due to the coronavirus.
“Today’s announcement ensures that the support offered by payment deferrals is as flexible and accessible as possible.
“This means that borrowers will once again be able to access deferral payments for a maximum of 6 months.
“However, if you are able to keep paying, it will be in your long-term best interest to do so. Payment deferrals should only be taken when absolutely necessary. “
The new rules mean troubled borrowers have until March 31, 2021 to request mortgage leave.
After that date, they will be able to extend existing deferrals until July 31, 2021, the FCA said, provided those extensions cover consecutive payments not exceeding 6 months in total.
Borrowers who have not yet agreed to a deferral – but think they need the full 6 months – should apply in good time before their February 2021 payment deadline, the FCA added.
Borrowers with single or partial interest mortgages affected by the crisis may also delay repayment of their mortgage principal until October 31, 2021.
Payment deferrals don’t prevent interest from accumulating, which means your overall debt will go up if you take one.
But the vacation will not be flagged as missed payments on a borrower’s credit report, the FCA has confirmed.
However, people who opt for personalized support programs from lenders at the end of their mortgage payment holiday will see this reflected in their credit report.
The FCA added that you should track your mortgage payments if you can afford it, and only seek help when absolutely necessary.
The banking regulator also explained exactly who will and will not be able to access the payment deferrals.
- Those who have not yet had a payment deferral will be able to benefit from a payment deferral of 6 months in total
- Those who currently have a payment deferral will be able to top up up to 6 months in total
- Those who have already had payment deferrals of less than 6 months will be able to top up, as long as the total of the deferrals does not exceed 6 months. This includes those who receive personalized support and those who are behind on payments.
- Borrowers who have already had 6 months of payment deferral will not be eligible for another payment deferral. Companies will provide tailor-made support tailored to their situation. This may include the ability to defer other payments