Borrowers who are taking a three-month mortgage payment holiday will be able to extend it for another three months, or start making reduced payments, the City regulator has confirmed.
The Financial Conduct Authority (FCA) said it will press ahead with proposals it had previously made to extend support for people who are either coming to the end of a payment holiday or who are yet to request one.
For customers still experiencing temporary payment difficulties due to coronavirus, the options will include a full or part payment holiday for a further three months.
People yet to apply for a payment holiday have until October 31 to do so.
Christopher Woolard, interim chief executive at the FCA, said: “The measures we have confirmed today will mean anyone who needs to can get help from their lender if they are still struggling to pay their mortgage due to coronavirus.
“It is important that if a consumer can afford to restart mortgage payments, it is in their best interests to do so. Customers should talk to their firm about the best option available for them.”
The FCA also confirmed that a current ban on lender repossessions of homes will continue to October 31.
It said payment holidays offered under the guidance should not have a negative impact on credit files.
But borrowers should bear in mind that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.
The new guidance only applies to mortgages – not other consumer credit products which are covered separately.
The FCA said the consumer credit product guidance will be updated in due course.
Generally, mortgage interest still builds up during a payment holiday, unless the lender says otherwise, and the outstanding debt will still be owed by the borrower.
This may mean a borrower might find they need to extend the length of their mortgage term when they come to the end of a payment holiday, to make sure their monthly payments are around the same level they were before.
