Martin Lewis covered mortgage holidays several times throughout 2020, with the Money Saving Expert warning at times that coronavirus support should only be utilised as a last resort. Today, Martin was forced to address the rules and future of mortgage holidays once more as he was questioned on This Morning.
A woman called Amber asked Martin if mortgage holidays will be introduced again like how they were in March and Martin was quick to offer clarity: “Well, there already is a mortgage payment holiday system in place it’s on until the end of this march coming.
“The rules are this, you are effectively automatically entitled to up to six months of payment holiday without it going on your credit file.
“Talk to your mortgage lender of course, but it doesn’t mean you don’t pay for that time, it means you don’t have to make payments now but the interest still tapers up and you have to make it that later.
“So if you haven’t had a mortgage payment holiday already you can apply for one now.
“If you’ve already had one you can apply for up to six months, so if you’ve had three months a while back, you could get another three months now.
“If you’ve had six months, to get [support] you need to be struggling due to the financial impact of coronavirus.”
Martin went on to provide examples of what qualifies as “struggling”, noting workers who have been furloughed self-employed who have seen income drop should be eligible.
He concluded by explaining what will happen to those who have already had six months worth of mortgage payment freezes: “If you’ve had your six months, then what you move to is what they call tailored support which is where the mortgage lender should look at how it can help you, but you’re not automatically entitled to a payment holiday, they may offer you one, but that will go on your credit score in the future.
“It is worth noting that when I say the first payment holidays won’t go on your credit file, they won’t, but they will invariably stop you remortgaging right now whilst you’re on a payment holiday.
Martin Lewis confirms ‘important’ furlough rule for parents [INSIGHT]
Martin Lewis quizzes Citizens Advice boss on PIP rules [EXPERT]
Martin Lewis issues urgent warning on buy now pay later plans [WARNING]
“So there is help available and the system is in place right now, talk to your mortgage lender if you’re struggling.”
In late 2020, the FCA extended mortgage holidays and affected savers can apply up until March 31.
They warned however that lenders can only agree to a payment holiday of up to three months at a time.
All payment holidays must also end by July 31 2021.
Additionally, the FCA confirmed no one should have their home repossessed without their agreement until after January 31 2021.
As the announcement was made, Sheldon Mills, the interim Executive Director of Strategy and Competition at the FCA, provided the following comments: “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.”
On top of mortgages, it is also possible to utilise payment holidays for the following financial products:
- credit cards
- rent to own, buy now pay later and pawnbroker assets
- payday loans
- car finance