The Financial Conduct Authority (FCA) has confirmed proposals to enhance support for borrowers affected by coronavirus.
The FCA has outlined that firms will provide tailored support to those who have already deferred mortgage payments for six months.
The guidance will be effective from 20 November, however the FCA encourage firms that are able to start providing enhanced support to do so sooner.
The FCA also detailed that those who have not yet had a payment deferral will be eligible for payment deferrals of six months in total, and those who currently have a payment deferral will be eligible to top up to six months in total.
In addition, individuals who have previously had payment deferrals of less than six months will be able to top up, as long as total deferrals do not exceed six months.
The FCA outlined that this includes those receiving tailored support and those who are behind on payments.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: ‘Today we have confirmed further support for borrowers struggling financially as a result of coronavirus.
‘The announcement we have made today, ensures that the support offered through payment deferrals is as flexible and accessible as possible.
“This means borrowers will again be able to access payment deferrals up to a maximum of six months.
“However, if you are able to keep paying it will be in your best long-term interest to do so. Payment deferrals should only be taken when absolutely necessary.”
As Mills highlighted, borrowers who have already had six months of payment deferrals will not be eligible for a further deferral.
Consumers can apply for an initial or a further payment deferral until 31 March 2021.
Individuals will be able to extend existing deferrals to 31 July 2021, provided these extensions cover consecutive payments and subject to the maximum six months allowed.
Furthermore, the FCA has confirmed that no-one should have their home repossessed without their agreement until after 31 January 2021.
The FCA also confirmed that as well as accessing payment deferrals before maturity, borrowers can access payment deferrals after maturity without this affecting their ability to delay the capital repayment.
Gemma Harle, managing director of Quilter’s network advice business, commented on the FCA’s announcement: “Following the news that the UK was going into another national lockdown a few weeks ago, the FCA were quick to let borrowers know that there was going to be help on the horizon in the form of further mortgage payment holidays and today they have set out what’s on offer.
“The FCA’s guidance gives borrowers the opportunity to continue to defer mortgage payments and reveals that borrowers can defer up to 6 months of payments in total.
“Sadly, anyone who has already had six months and needs more time will not be able to defer for a longer period.
“On top of this, the FCA has urged lenders to continue to provide tailored support to borrowers to get through this tough time.
“For many borrowers this winter period might have looked bleak to say the least and this news coupled with the positive news about a slew of effective vaccines for COVID-19 could represent a glimmer of light at the end of the tunnel.
“However, anyone thinking about taking advantage of a holiday should think very carefully about doing so.
“Mortgages are often the biggest single piece of debt anyone takes on in their life and it is important to make sure that any decision works both for the short and long-term if possible.
“Extending the term of a loan means it will cost more over the lifetime of the product, so it is a decision that requires careful thought. For most people it will only be the right move if they face imminent financial difficulty and it is always worth if possible, discussing your options with a professional.”