Homeowners who are still unable to pay their mortgage because of the coronavirus crisis will now be eligible for a further three month repayment holiday, the Government announced today.
An initial three month mortgage holiday scheme was set up in March and ministers have now decided to extend it.
The deadline for applying for an initial repayment break is also being extended to October 31.
However, where people can afford to restart payments they are being encouraged to do so, even if it is not for the full normal monthly amount.
The Government today announced a mortgage holiday scheme is being extended by a further three months
John Glen, the Economic Secretary to the Treasury (pictured far right), insisted the Government is ‘doing everything we can to help people with their finances at this difficult time’
More than 1.8 million mortgage payment holidays were taken up by consumers when the scheme was first announced.
The first of these three month payment pauses are now set to start coming to an end in June.
But with lockdown measures still in place and the UK economy still spiralling, the Treasury has opted to continue the initiative and to offer people who need it another three months of non-payment.
Mortgage-holders will be contacted by their lender to discuss the best way forward.
The Treasury said that it is in the ‘best interest’ of homeowners to restart mortgage payments if they are able to.
But the option of a further three month holiday will be available to people who are struggling and need extra help, giving them a six month break from payments.
John Glen, the Economic Secretary to the Treasury, said: ‘We’re doing everything we can to help people with their finances at this difficult time, and that includes making sure people get the support they need with their mortgages.
‘That’s why we’re working with the banks and lenders to extend payment holidays if people need them.
‘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.’
New draft guidance for lenders on how the Government expects them to proceed and the options available to customers was today published by the Financial Conduct Authority.
Options include extending the application period for a mortgage holiday until October 31.
That means that homeowners who have not yet had a payment holiday but who are now experiencing financial difficulty will be able to request one.
Meanwhile, an existing ban on the repossession of homes will be continued to the same date.
Christopher Woolard, interim chief executive at the FCA, said: ‘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.
‘Where consumers can afford to re-start mortgage payments, it is in their best interests to do so.
‘But where they can’t, a range of further support will be available. People who are struggling and have not had a mortgage payment holiday, will also continue to be able to apply until 31 October.’
The new guidance will come into effect after a short consultation with lenders who will then be expected to contact customers whose mortgage holiday is coming to an end.
For those who are unable to restart full payments they could pay a proportion of the monthly amount or temporarily switch to an interest only mortgage.