SUPPORT FOR MORTGAGE CUSTOMERS THROUGH COVID-19 PAYMENT DIFFICULTIES

Lenders continue to offer a range of tailored support measures for customers who are experiencing issues paying their mortgage during the Covid-19 pandemic, including taking a mortgage payment deferral

Under the Financial Conduct Authority’s (FCA) guidance, applications for a new mortgage payment deferral (sometimes referred to as a ‘payment holiday’) closed on 31 March 2021. All payment deferrals ended on 31 July 2021.

Anyone who is finding it difficult to pay their mortgage, regardless of having had a payment deferral, will be offered support by their lender. It is important to discuss this tailored support with your lender as soon as possible.

As always, the guidance is that if you are able to pay your mortgage, you should. It will always be in your best interests to pay at least some or all of your mortgage if you can, as this will reduce the amount of your total repayments in the long run.

However, if you are concerned about making your mortgage payments during this time you should look at your lender’s website in the first instance. This will be updated with the latest information, including frequently asked questions, which should answer many queries.

Customers can contact their lenders through several channels. These include mobile and online banking services in addition to telephone services.

Do not cancel your direct debit - you must agree tailored support with your lender in advance.

Cancelling your direct debit will be counted as a missed payment. This could show up in your credit file and may impact your ability to borrow or re-mortgage in the future.

KEY POINTS

  • If you had a payment deferral or are newly impacted and have difficulty in meeting your mortgage payments your lender will offer you continued support that is tailored to your needs. It is important that you contact your lender to discuss the options available to you and agree the support.
  • If you have missed mortgage payments or are already in arrears, you should contact your lender– tailored support specific to your circumstances may be the best option for you.
  • Customers should provide clear and substantive information regarding their circumstances to ensure lenders can provide appropriate tailored support. Lenders may offer one or more of the following: part payment plans, mortgage term extensions, temporary transfer to an interest-only mortgage, deferral of interest due or the addition of what is owed to the total mortgage balance (known as capitalising). Lenders are required to discuss the options available to you and agree a form of support before it can be applied to your account.
  • During a payment deferral period under the FCA’s guidance, the monthly payments a customer did not make were not reported to credit reference agencies as a worsening arrears. Where you require tailored support, this will be reported on your credit file in line with your provider’s standard policy. This helps to ensure that an accurate reflection of your circumstances is recorded at the credit reference agencies. 
  • You may also be eligible for other government support and we encourage you to visit the Money Helper website to understand what additional help might be available to you.

I have received a letter telling me that my house may be repossessed, what do I do?

The possession moratorium ended on 1 April, however, possession will always be a last resort when all other tailored support options have been exhausted. Government restrictions on evictions have also lifted.

Lenders are able to issue a formal demand, to make you aware of the money you owe and inform you that the case will go to possession proceedings.  It is important that you get in touch with your lender to discuss your options. Lenders will seek to resolve the case through alternative means, including informing you about voluntary means and rehousing options.

If you have missed mortgage payments pre-pandemic and these payments remain outstanding, it is important that you contact your lender to discuss your options, including options to pay if you can.

Lenders can proceed with repossession, including for empty properties or where the customer wants the possession to go ahead. For buy-to-let customers, lenders may use a Receiver of rent where appropriate which would allow the tenant to remain in the property if they are maintaining rental payments.

Lenders can commence court action, including obtaining a possession order from the courts. However, lenders will aim to engage or re-engage customers who were already in proceedings prior to March 2020 or who are not in contact with the lender and have not been paying their mortgage for some time, via letters or phone calls.

I have an interest-only mortgage, Covid-19 has impacted on my ability to repay my mortgage. What help can I get?

If you are experiencing financial difficulty you should contact your lender as soon as possible, as there may be range of options available. If your interest-only or part-and-part mortgage expires between 20 March 2020 and 31 October 2021 you may be eligible for further help. If your ability to repay the capital of your mortgage at the end of the term has been impacted by Covid-19, lenders can support you by allowing you to delay this payment until 31 October 2021. There will be no adverse reporting on your credit file for delaying repayment of your capital.

Lenders will write to customers who are eligible for this support and it is important that you contact your lender if you require this help, before missing your capital repayment date.

Lenders will carefully explain the implications of delaying repayment of the capital sum. It will always be in your best interests to pay some or all of your capital repayment if you can. Choosing to delay the repayment of capital could expose you to further risk, for example should there be further market disruption at the time when the capital becomes to be repaid.