HOMEOWNERS will be offered an extra three months’ mortgage repayment freeze taking the total to six months so far.
Proposals to extend repayment holidays have today been announced by HM Treasury as we approach the end of the first three-month freeze.
Over 1.8million mortgage payment holidays have so far been taken up since the scheme was first announced by chancellor Rishi Sunak back in March.
In addition, the government says homeowners will now have until October 31 to ask for a three month freeze if they’ve not taken one up already.
Also on the cards are plans for lenders to offer lower repayments instead of a complete payment freeze.
Meanwhile the current ban on properties being repossessed will continue until October 31.
The guidance is expected to take place shortly following a consultation, which will end on May 26.
Plans to extend mortgage repayment holidays were first mooted earlier this week, although some experts had thought HM Treasury would extend mortgage repayment holidays by up to 18 months.
What do the changes mean?
When the new measures come into force, lenders will be expected to contact customers coming up to the end of their payment freeze to discuss their options.
If borrowers can start making repayments at their normal rate this is encouraged, as putting off repayments for longer will see future repayments increase and you’ll end up paying more in interest too.
Another option for those able to make repayments will include extending the term of the mortgage so monthly repayments fall, although this will mean you end up paying more interest over the life of the mortgage.
For those who are still struggling, lenders will be able to offer an extra three months’ repayment freeze or lower repayments.
Another option is allowing borrowers to temporarily switch to an interest only mortgage where you only repay the interest and don’t make any payments towards the capital itself.
Lenders can also reduce or waive interest payments, as well as consider signposting customers towards sources of debt advice.
The city watchdog says payment holidays and partial payment holidays offered should not have a negative impact on credit files.
You can use MoneySuperMarket’s mortgage holiday calculator to work out how deferring payments will affect you. And here’s how to apply for a mortgage holiday if you’re struggling.
‘Help is there’
Economic secretary to the Treasury, John Glen, said: “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.”
Christopher Woolard, interim chief executive at the Financial Conduct Authority, added: “Our expectations are clear – anyone who continues to need help should get help from their lender.
“We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.”