Deadline for COVID mortgage payment holidays revealed
The Financial Conduct Authority (FCA) has revealed that COVID mortgage payment holidays in the UK will not extend past the 31 October and any financial support past that point will be marked on credit files.
The FCA has emphasised that both a payment holiday and partial payment holiday are temporary, and the outstanding amount will need to be paid back at a later date. Interest will also continue to build during this time and repayments may be higher after the payment holiday according to the FCA.
Miles Robinson, head of mortgages at online mortgage broker Trussle, commented on the deadline: “It’s clear that mortgage payment holidays have proved a vital lifeline for some homeowners who have suffered financially as a result of the coronavirus pandemic.
“However, the FCA has recently announced that the relief will not extend beyond 31st October 2020.
“It’s important to know that unlike before, if you need financial support from your lender after 31st October, it will be marked on your credit file. We’d urge homeowners to only utilise the mortgage payment holiday if it’s essential.
“Anyone considering a mortgage payment holiday should also be aware that once the mortgage payment holiday is up, your monthly payments will increase slightly.
“This is because the additional interest is added to your total mortgage balance. Some lenders offer other potential options, which include switching some of the loan amount to interest only payments in the short term.
“For existing homeowners, now could also be a good time to think about remortgaging. Any aspiring or existing homeowners who are considering taking a mortgage payment holiday should seek professional advice as soon as possible to discuss their options.”