Understanding the Payment Holiday Extension

May 29, 2020

As of the 17th March this year, banks agreed to offer a payment holiday for those struggling with their mortgage repayments as a result of the Covid-19 crisis. This was a three-month agreement that runs up until the end of June, of which over 1.8 million mortgage repayment holidays were accepted.

But as the cloud of uncertainty surrounding the Covid-19 crisis continues to hang over us, the FCA has announced an extension on the current date of the payment holiday. The new guidelines in place means that people struggling to make their mortgage repayments will be able to apply for the scheme if they have not yet received any payment holiday. People will now have up until the 31st October to get relief from the repayments if they are in a financially vulnerable position.

However, it is important to keep in mind that people are being urged not to stay on payment holidays for longer than they need. It’s in people’s best interest that they continue to keep up mortgage repayments as soon as they are in a position to do so financially.

What can I expect if I need a payment holiday?

Continued support
Your lenders should keep in contact with you at the end of your payment holiday to check if your financial circumstances have improved or not and decide on a plan of action.

Available to those who are now in a vulnerable position
If you haven’t taken a payment holiday but now find yourself in a financially vulnerable position, you can apply for the extension.

Your safety is paramount
The repossession of homes has been banned which will continue along with the holiday payment extension until the 31st October 2020.

Credit Score
It’s important to keep in mind that in some cases, taking a payment holiday could have a negative impact on your credit score, as the build up of interest could cause your credit to take a hit.

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