Homeowners who are struggling to pay their mortgage due to COVID-19 are set to be given a further three-month extension on their mortgage payments.
For those homeowners who have paused their mortgage but now wish to resume payments, they will be given various options to help make these more manageable. One of the proposed options will be to extend the mortgage term so their monthly repayments remain at about the same level as they were prior to their mortgage holiday.
As well as extending the mortgage payment holiday, the application deadline for a mortgage holiday will also be extended until 31st October. This means that eligible homeowners that have not yet had a payment holiday, will be able to request one.
Christopher Woolard, the Interim Chief Executive at the FCA, said homeowners “who are struggling and have not had a mortgage payment holiday, will also continue to be able to apply until 31 October.”
These proposals are included in new draft guidance from the Financial Conduct Authority (FCA), which sets out the expectations for mortgage companies and the options available to homeowners.
The move comes after more than 1.8 million mortgage payment holidays were taken up when the support measure was announced in March and would be coming to an end in June. The draft guidance obliges the lender to contact the homeowner to discuss their options.
John Glen, Economic Secretary to the Treasury said: “We’re doing everything we can to help people with their finances at this difficult time, and that includes making sure people get the support they need with their mortgages. That’s why we’re working with the banks and lenders to extend payment holidays if people need them… Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan; but if they are still struggling, I want them to know that help is there.”
The draft proposals are subject to consultation until 5pm on 26th May and it is expected that final guidance will be published shortly afterwards.