Covid-19 payment holiday applications close: how to get help with your money
The deadline to apply for a payment holiday on your mortgage, credit card or personal bank loan has passed – but it's still easy to get help if your finances have been affected by the Covid-19 pandemic.
Since last March, millions of people took temporary payment breaks due to the pandemic, however these support measures have finally come to an end.
Here, Which? explains the options which are now available for borrowers facing financial difficulties and outline the steps you can take to get help.
Payment holidays and Covid-19
Last March, the government announced a bundle of measures made to help borrowers struggling with their finances due to the Covid-19 outbreak.
This included the opportunity to apply for temporary payment deferrals on mortgages, charge cards and personal loans.
By July, 1.8 million people had taken payment breaks on their mortgages, and deferrals had been granted on 1.18 million charge cards and 828,000 loans.
After the commencement of a further national lockdown at the end of October, the federal government extended the deadline to apply for a payment holiday to 31 March this season.
Who can still get a payment holiday?
Now we’re into April, the deadline to try to get a payment holiday on your mortgage, charge card or personal loan has passed, with one exception.
If you have now a payment holiday in place, you can have it extended up to 31 July, as long as it doesn't take you within the six-month limit.
Tailored support options for borrowers
Up to 31 March, banks had been told to offer personalised support options once borrowers had used up their maximum of six months of payment holidays.
From today, however, tailored support will be available as standard to any customers in financial hardships.
Support for mortgage holders
The support you will get will be based with an assessment of the financial circumstances, but tend to include:
- a pause on payments for a temporary period
- a reduction of payments for a temporary period
- changing your mortgage term to create payments more affordable.
Your lender should inform you of any consequences of those options. For example, further payment deferrals or reductions can lead to it taking longer and squandering your more to repay your mortgage. These measures may also be reflected in your credit file.
Support for loans and charge card borrowers
There is also a selection of support choices on the table for credit card customers. Again, these will depend on your individual circumstances, but could include the following:
- offering you support before you miss a payment
- pausing or reducing payments for a set period
- setting up a sustainable and affordable repayment schedule and preventing debts from escalating once it is in place
- directing you to independent debt help or money guidance, which you can access before deciding which type of support to take.
What to complete if you're worried about your finances
If you're concerned about making payments on your mortgage, charge card or loan, the first step is to contact your lender as quickly as possible and become open about your difficulties.
This will give your bank to correctly assess your circumstances and discover the most suitable remedy.
You may also consider taking independent advice from a debt charity such as StepChange or even the Money Advice Service.
Ban on repossessions comes to an end
From today, mortgage brokers will once more have the ability to enforce repossession orders, using the ban on enforcement activity having now ended.
The FCA says enforcement action must only take place like a last resort, and that lenders should think about whether repossession is appropriate, especially if their customer is considered vulnerable due to circumstances associated with Covid-19.
Which? believes the FCA’s decision to finish the ban on repossessions is a mistake at a time when lots of people have had their finances severely damaged through the pandemic.
We believe the ban on repossessions should have continued while Covid-19 restrictions and associated support (such as the furlough scheme) stay in place.
