The Financial Conduct Authority has released new guidance which clears up some of the uncertainties surrounding the mortgage holidays announced last week by the government.
The FCA says lenders should:
- grant existing customers a payment holiday for an initial period of three months, where they may experience payment difficulties as a result of Coronavirus and where they have indicated they wish to receive one;
- ensure there is no additional fee or charge as a result of the payment holiday, although here may be additional interest as the ‘holiday’ period is added as an extension to the term of the loan;
- not include the holiday period on any assessment of a customer’s credit rating.
The FCA also says that with the difficulties faced by home owners during the virus crisis, it believes that repossessions should not begin or continue unless the firm can demonstrate clearly that the customer has agreed it is in their best interest.