Relief from paying back loans and credit cards

The Financial Conduct Authority (FCA) has asked lenders to use flexibility built into their rules to support customers during the coronavirus outbreak, taking into account individual circumstances.

The FCA has announced that payment holidays should continue to be available. This means that consumers who haven't had a payment deferral yet can apply for one of up to six months, unless it's not in the consumer's interest. The FCA is clear that if you can continue to make payments, you should.

Borrowers can apply for a one-month deferral of high-cost, short-term credit.

If you're no longer eligible, the FCA's previous guidance said that lenders should give ‘tailored support’ for people still struggling – but any changes to payments will be recorded with credit reference agencies.

If you’re given a payment holiday, your lender should record it in a way that doesn’t impact your credit score– but beyond the payment holiday itself, any other changes to payments will be recorded.

The application deadline for payment holidays is 31 March 2021. All payment holidays must end by 31 July 2021.

Mortgage payment holidays

If you own your own home, there’s good news from mortgage lenders. They’ve agreed to offer payment holidays to customers in financial difficulty due to the Covid-19 outbreak.

After the government announced a second lockdown on 31 October 2020, the FCA confirmed that it’s updating its guidance so that mortgage borrowers who haven’t yet had a mortgage payment holiday can ask for one.

You should carefully consider whether you need a payment holiday. If you can still make mortgage repayments, you should – this is only for those in financial difficulty.

You need to apply by 31 March 2021 and all payment holidays need to end by 31 July 2021. Remember that mortgage payment holidays have to be agreed with your lender – don’t simply stop making payments.

The guidance says that if borrowers have already benefited from a six-month payment holiday, lenders should move to ‘tailored support’ based on individual circumstances. The FCA says this should be in the form of further payment deferrals, reduced payments or an extension to the repayment term.

Unlike the payment holidays, lenders will need to report these types of changes to repayments to credit reference agencies.

Contact Team Cangaf at cangafltd@gmail.com for further assistance

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