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The application deadline for mortgage payment holidays has been extended by three months

2-minute read

Mollie Millman

5 June 2020

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The Financial Conduct Authority (FCA) has published draft guidance proposing a three-month extension to the initial application period for mortgage payment holidays.

It comes as banks and building societies have reiterated their commitment to landlords amid the coronavirus pandemic.

The FCA’s draft guidance was accepted and came into force on 4 June, meaning customers who are in financial difficulty and haven’t applied for a mortgage payment holiday yet can ask for one until 31 October.

If you’ve had a payment holiday already, you can ask your lender for an extension.

Lenders support the ban on repossessions

The latest evidence suggests almost two million mortgage payment holidays have been issued.

Lenders announced they will also continue to support the current ban on repossessions for both residential and buy-to-let customers.

But the ban on repossessions is temporary and currently scheduled to end on 31 October this year. This ban is aimed at giving borrowers reassurance that they won’t have their properties repossessed while coronavirus is ongoing.

Treating landlords fairly

The FCA recently published its draft guidance on how lenders should treat customers affected by coronavirus.

It states: “Where a customer is experiencing or reasonably expects to experience payment difficulties as a result of circumstances relating to coronavirus, and wishes to receive a full payment deferral, a firm should grant a customer a full payment deferral for three monthly payments, unless it can demonstrate it is obviously not in a customer’s best interests.”

The guidance makes it clear that this deferral is not available to customers who had a payment shortfall prior to 20 March 2020.

Mortgage payment holidays

Lenders can also help landlords meet their repayments by extending the term of their mortgage to reduce payments, and by increasing a payment holiday if one has already been taken.

UK Finance said 1.82 million mortgage payment holidays have been issued as of 20 May, the equivalent of one in six mortgages.

Lenders express support on next steps for landlords

Stephen Jones, the chief executive of UK Finance, said: “Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps that best suit their needs.

“The industry looks forward to regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan in the coming weeks.

“For those borrowers who have not already applied for a mortgage payment holiday, the industry supports the extension of the availability of payment holidays until October 31, 2020.

“This will provide much-needed breathing space for borrowers who need it.

“Lenders are committed to the moratorium on involuntary repossessions to ensure no homeowner loses the roof over their head because of Covid-19 related repayment difficulties.”

He added that borrowers who have already taken a mortgage payment holiday and can afford to make payments are encouraged to do so, as this will reduce the level of their repayments in the long run.

While involuntary repossessions are currently banned, lenders always consider repossession as a last resort.

How do you feel about lenders expressing their support for landlords? Let us know in the comments below.

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