Mortgage Payment Holidays and Coronavirus

Mortgage Payment holidays and COVID-19

The Financial Conduct Authority have this week issued a set of guidelines around how mortgage lenders should deal with a request for a mortgage payment holiday.

Key Points are:

• Mortgage lenders to offer an automatic three month payment holiday to borrowers who are impacted directly or indirectly by Covid-10 (Coronavirus)
• Borrowers need to have an up to date mortgage account with no current arrears to benefit from the three month mortgage payment holiday
• Borrower will self-certify that they are impacted by Coronavirus – this means that mortgage lender will not run an income and expenditure assessment as normally required if a borrower is in difficulty – In simple terms if the borrower says they have been impacted and require the holiday, that is good enough
• Borrowers should be aware that interest will accrue as usual in the holiday period, adding to their outstanding balance – borrowers will be asked to make up the deferred payments in the future
• If borrowers need assistance over and above the three month mortgage payment holiday, they still have the option to have their situation fully assessed by the Lender and wider options discussed – The FCA refer to this as forbearance procedures and unlike the standard offered three month mortgage holiday, agreements will be made specific to the borrower(s) and this may impact their credit file(s)

Mortgage payment holiday process

• The borrower contacts their lender and informs that they are impacted by Covid-19
• The lender accepts this and offer a three month payment holiday
• No evidence of the borrowers position will be requested
• The lender will tell the borrower that unpaid interest will accrue (adding the the loan)
• The lender will tell the borrower that there will be contact at the end of the three months to complete an assessment of the customer circumstances
• After the holiday period an arrangement to pay will be agreed between the lender and the borrower  to recover the missed payments making sure the mortgage remains affordable and sustainable
• The lender will make the borrower aware that they can complete a full assessment at outset if wider options may be more suitable

Mortgage Payment Holidays and Mortgage Product Transfers

If you are on your lender’s standard variable rate, or if your current mortgage rate ends in the next 4 months, you need to consider the impact of mortgage payment holidays on mortgage rate.

Contacting your Lender

Click your lender for details

Switching to interest only

Switching to interest only is not part of the FCA guidelines but we have already seen the following lenders suggesting they will offer their customers up to 12 months on an interest only basis – other lenders may potentially follow.

• Aldermore
• Barclays
• Bank of Ireland
• Buckinghamshire BS
• Chorley BS
• Family Building Society
• Hanley Intermediaires
• Hickley and Rugby BS
• Hodge
• Ipswich BS
• Kent Reliance
• Leeds BS
• Market Harborough
• Marsden Building Society
• Nationwide BS
• Newcastle BS
• Penrith
• Post Office
• Principality BS
• Santander
• Skipton Mortgages
• Stafford Railway
• Teachers BS
• Tipton BS
• Virgin Money
• Vida Home Loans
• West Brom BS

Do not assume this list is wholly correct or complete – it is simply our understanding from information currently available to Brokers

Important note

The details on this page are provided for information only. A Mortgage Now do not intend this as advice regarding your own situation and can take no responsibility for the consequences of any action you may take with regard to mortgage payment holidays and your mortgage account.