Further to the Chancellor’s announcement regarding the mortgage industry’s support for homeowners who are experiencing financial issues due to COVID-19, lenders representing banks, building societies and other specialist lenders have come together to announce additional support for homeowners and residential landlords.
These include extending the option of a payment holiday of up to three months to residential buy-to-let landlords who have tenants who are experiencing issues with their finances, as either a direct or indirect result of Coronavirus, as well a three month moratorium on residential and buy-to-let possession action to start from 19 March 2020 helping provide customers with reassurance that they will not have their homes repossessed at this difficult time.
Commenting on the package of measures, Stephen Jones, UK Finance CEO, said:
“Monthly mortgage payments tend to be the largest outgoing for the vast majority of households and lenders want to reassure both homeowners and landlords who have tenants who may be affected financially that the industry is working hard to put measures in place to support them during these uncertain times.
“In addition to the industry’s support for residential homeowners, mortgage lenders are extending the same support to buy-to-let landlords who have tenants experiencing issues with their finances as a result of COVID-19 and the options include a payment holiday of up to three months.
“For those customers already experiencing financial difficulty, lenders have also agreed a three-month moratorium on residential and buy-to-let possession action. The industry wants to reassure customers that they will not have their homes repossessed at this difficult time and therefore, these measures will start from tomorrow (19 March 2020).
“All customers who are concerned about their current financial situation should get in touch with their lender at the earliest possible opportunity to discuss if this is a suitable option for them.”
Robin Fieth, Chief Executive of the Building Societies Association (BSA) said:
"Building societies are acutely aware that this is a worrying time for those with a mortgage or who pay rent as both typically account for a significant proportion of household expenditure.
"Now is a time for lenders to be flexible. The steps being taken by the industry today will offer some breathing space for those affected by the Covid-19 situation whether directly or indirectly.
"The best first step advice remains to get in touch with your lender or landlord."
For further information please see Q&A below
Notes to editors
UK Finance is the collective voice for the banking and finance industry. Representing more than 250 firms across the industry, we act to enhance competitiveness, support customers and facilitate innovation.
- The BSA represents all 43 building societies and 6 of the larger credit unions, all mutual owned by their customers.
Q&A: Support for mortgage customers
18 March 2020
Mortgage providers are ready to support customers who are experiencing issues with their finances as a result of COVID-19, including giving the option of a payment holiday.
If you are concerned about making your mortgage payments during this time, you should contact your provider at the earliest possible opportunity to discuss the options available.
Your mortgage provider can offer you a payment holiday of up to 3 months without the need to assess your circumstances. With a payment holiday you will not have to make your normal monthly mortgage payments.
Your lender can also offer you more tailored support according to your individual situation if you wish to go through a full assessment of your circumstances.
- A payment holiday will be available to all customers who are up to date on their mortgage payments.
- A payment holiday will also be available to all Buy-to-Let landlords whose tenants have lost income because of the impact of COVID-19. Landlords are expected to pass on this relief to their tenants to ensure that they are supported during this time.
- Customers will still owe the money where a payment holiday has been granted and interest will still accrue, so if you are able to make part of your normal mortgage payment to reduce the money you owe or your interest charges then you should consider doing so.
- Firms will make every effort to ensure that the payment holiday does not negatively impact on your credit file.
- If you are already in arrears, you should contact your lender as soon as possible. Lenders will review any change to your circumstances to ensure that payments remain sustainable.
- If you are already experiencing financial difficulty, lenders have also agreed a three month moratorium on residential and buy-to-let possession action (from 19 March 2020), meaning that no homes will be repossessed at this difficult time.
Q: What is a payment holiday?
A: With a payment holiday you will not have to make any monthly mortgage payments for a set amount of time, in this case up to three months.
However, it’s important to remember that you still owe that money and the interest on your mortgage still accrues during a payment holiday.
At the end of the payment holiday your provider will contact you to assess your circumstances and agree a manageable way for you repay the interest charges incurred and make up the deferred payments. Each lender will have a range of options available to help you to do this.
Q: Will I be eligible for a payment holiday?
A: To be eligible for a payment holiday you will need to be up to date on your mortgage payments.
If you are a Buy-to-Let landlord, it will be available if your tenants have lost income because of the impact of COVID-19.
There a number of options available and payment holidays aren’t always the most suitable solution for everyone. By speaking to your mortgage provider, they can tailor the best option for you.
Q: How do I apply?
A: If you are concerned about making your mortgage payments during this time you should contact your mortgage provider as soon as possible. You don’t need to provide any documentation; you will just need to self-certify that your income has been either directly or indirectly impacted by COVID-19.
If you are a Buy-to-Let landlord, you will need to self-certify that your tenant’s income has been impacted by COVID-19. Landlords are expected to pass on this relief to their tenants to ensure that they are supported during this time.
At the end of the payment holiday your provider will contact you to assess your circumstances and agree a manageable way for you repay the interest charges incurred and make up the deferred payments. Each lender will have a range of options available to help you do this.
Q: How long will it take to for my provider to process my application?
A: Firms are doing their best to support their customers during these unprecedented times. However, the spread of COVID-19 is also having an impact on their own staff and applications will be dealt with as quickly as possible.
Q: If I take a payment holiday what will happen to my credit score?
A: Mortgage providers will make every effort to ensure that if you take a payment holiday it does not negatively impact on your credit score.
Q: What happens if I am already in arrears?
A: If you are concerned about the impact Covid-19 will have on your income, then you should contact your mortgage provider as soon as possible. They will review any changes to your circumstances to ensure that your payments remain sustainable. Lenders will make every effort to support people already in financial difficulty, while ensuring a mortgage remains sustainable.
Mortgage providers have agreed to a three month moratorium (from 19 March 2020) on residential and buy-to-let possession action, meaning that no homes will be repossessed at this difficult time.
Q: What if I don’t own my property but rent instead?
A: You should contact your landlord or managing agent if you have problems paying your rent. If you are a landlord and your tenants are unable to pay their rent you should contact your lender as soon as possible to discuss the options that may be open to you.
Q: How will the possession moratorium work?
A: Key information: for lenders to ‘stay’ possession proceedings for 90 days
- Lenders will suspend all possession orders
- Lenders will not commence any court action, including putting the case to court or instructing on matters
- Lenders are able to issue a formal demand, so that the customer is aware of the money they owe and are informed that the case will (eventually) go to possession proceedings.
- This letter is valid for eight weeks, but firms will agree not to take any further steps until the end of the 90 day period
- There are exceptions for empty properties or where the customer wants the possession to go ahead
- In buy-to-let, lenders would still use a Receiver of Rent where appropriate but would not move to possession if the tenant could not pay