Mortgage holiday plans revealed by banks

March 22, 2020 by Brendan O'Neill

Lenders

Banks throughout the UK are providing details of how they will put the suspension of mortgage payments outlined by the Chancellor of the Exchequer into practice.

The Chancellor, Rishi Sunak, stated that ‘mortgage holidays’ lasting for a potential three months would be rolled out as a way of helping people who are struggling to keep payments up due to the economic effects of the coronavirus. Now the official trade body for banks in this country, UK Finance, has produced detailed information for those affected about how they apply for this help.

While not everyone is set to qualify for this temporary break from payments, those who are eligible will see their applications processed rapidly. The banks have confirmed the interest that is not paid during this ‘holiday’ period will not have an impact on the credit ratings of borrowers, but that this sum will be recovered in the future.

While this will help support borrowers who have seen their incomes fall sharply due to Covid-19’s effect on the economy, UK Finance is indicating that regulations laid out by the FCA mean that borrowers will still have to pay mortgage arrears once the situation return to normal. However, the organisation went on to add that the usual property repossession penalty for non-payment would not be likely to apply in this instance.

The mortgage industry is still figuring out the best way to deal with this crisis, like many others, but advisors should still take CeMAP courses ready for when it ends.