To make the description of the support being offered more accurate, the FCA has, in its updated guidance, revised the terminology from payment holiday to payment deferral.
A payment deferral is an arrangement under which your lender permits you to make no or reduced payments for a specified period, without treating your account as being in payment shortfall / arrears. It is important to remember that during the deferral period, although you are not making your normal repayments, your mortgage balance continues to accrue interest.
If you previously discussed this with us and / or received confirmation of a payment holiday, the terms of this are not affected by this change in terminology.
If we agree to a payment deferral for up to 3 months, although you are not making your normal repayments, your mortgage balance continues to accrue interest. At the end of the deferral period all of the outstanding deferred amounts will be added to your mortgage balance, this means that the overall cost of your mortgage will increase. See below for an illustration of how much this can impact the overall cost of your mortgage.
|Mortgage balance at start of payment holiday||£100,000||£300,000||£100,000||£300,000|
|Remaining Mortgage term (years)||20||20||30||30|
|Current Interest rate||5.04%||5.04%||5.04%||5.04%|
|Monthly payment before payment holiday||£662||£1,987||£539||£1,618|
|Monthly payment after payment holiday||£675||£2,026||£548||£1,644|
|Increase to monthly payments||£13||£39||£9||£26|
|Increase to the total amount payable over the remaining term||£1,151||£3,454||£1,506||£4,514|
These examples are based on a capital repayment mortgage and a 3-month full payment deferral. The actual increase in your payment will depend on your mortgage balance, your remaining mortgage term and your interest rate.
It’s important that all parties to the mortgage are aware of, and agree to, any support options we put in place. Before contacting us to talk through how we can help, please ensure you discuss this with everyone else named on the mortgage.
Please contact us on 0344 257 0427 and we’ll review your account and your current situation to help you find an appropriate solution for your circumstances.
If your household income has not been impacted or if you have funds available to maintain your mortgage payments, then a payment deferral may not be in your best interests.
Before requesting a full or partial payment deferral, you should consider all potential implications. In addition to these FAQs we’ve provided links at the end of this document to external sources of advice and additional information, to help you decide which option is best for you.
It’s important that you maintain mortgage payments if you can afford to, as it’s in your best interests
to do so.
Cancelling your mortgage payment without agreeing a payment deferral with us first will be treated as a missed payment, so it’s important you speak to us before cancelling or suspending your regular payment.
If we’ve agreed a full payment deferral with you and you normally pay by standing order, you’ll need to contact your bank and arrange for the payment to be stopped. If you normally pay by direct debit you don’t need to cancel this as we’ll place the collection on hold for a full deferral or reduce the amount if a partial deferral is agreed.
If you’re already in arrears, please contact us on 0344 257 0427 and we’ll discuss your current situation and how we can support you.
No. We may be able to offer a payment deferral for up to 3 months without any evidence to show how you have been impacted, but we’ll ask you some questions and provide you with information, so you can be certain that a deferral is in your best interests.
We won’t report a payment deferral as missed payments or arrears, however, lenders may use information obtained from other sources, for example bank account information, in their lending decisions.
If your account was already in arrears at the time of the payment deferral agreement, it will continue to be reported in arrears with the Credit Reference Agencies, but we won’t report this as getting worse during the period we’ve agreed to defer payments.
Yes. If you’re able to make a payment towards your mortgage it’s in your best interests to do so. Please contact us on 0344 257 0427 so we can talk you through the process
If you’re not experiencing, or don’t expect to experience payment difficulties and are able to maintain payments you should continue to do so.
We’ll contact you before the end of your payment deferral with details of when your next payment is due, how much this will be, and the additional support options available if you can’t resume payments.
If, after your initial payment deferral you are unable to resume payments, we may be able to agree a further deferral for up to 3 months. Please contact us on 0344 257 0427 so we can talk you through the process.
We’ll capitalise the deferred amounts, which means that we will collect the outstanding payments and interest over the remaining term of your mortgage. This will increase your monthly mortgage payment and the overall cost of your mortgage will be higher (see How does a payment deferral work? for an example).
We’ll contact you before making any changes with personalised details of how this will affect your mortgage.
Short term increase to repay the deferred amounts
You can increase your monthly repayment by an agreed amount sufficient to repay the deferred amounts over the next few months.
Lump Sum Payment
You can make a lump sum payment if you can afford to do so. This will limit the amount of additional interest you will pay and limit the additional overall cost of your mortgage.
You can make this payment over the phone. A lump sum payment toward deferred payments will not reduce the amount you can overpay penalty free and won’t attract a capital repayment fee. Please note that we cannot accept payments from credit cards or from parties who are not already named on the mortgage.
Extending the term of your mortgage
We may consider an extension of the mortgage term to maintain your existing repayment amount or reduce the monthly payments to a more manageable amount. This will mean the overall cost of your mortgage will increase but your monthly repayments will be slightly lower than they would be over your current remaining term.
We’re not currently accepting new residential applications which includes product transfer requests. Once your fixed rate ends, you may choose to move your mortgage to another lender without an early repayment charge. Your mortgage intermediary can advise you further regarding this.
If you’re worried that you can’t afford your mortgage payment, please contact us on 0344 257 0427.
We may be able to agree another full or partial payment deferral, but alternative options may be more appropriate. Please contact us on 0344 257 0427.
The following external links provide free money guidance and debt advice:
The Money Advice Service have put together guidance on how to deal with or put off any of the financial effects you might be suffering from due to coronavirus: https://www.moneyadviceservice.org.uk/en/categories/coronavirus
You can also phone 0800 138 7777 to speak to a money expert, use typetalk at 18001 0800 915 4622, or add +44 7701 342744 to your WhatsApp to send a message.
The FCA has also provided information for consumers on dealing with financial difficulties during the coronavirus pandemic: https://www.fca.org.uk/publications/guidance-consultations/draft-information-consumers-financial-difficulties-coronavirus
We’ve provided an illustration below to show the impact of the overall cost of your Interest Only buy to let mortgage.
|Mortgage Balance at start of payment holiday||£100,000||£300,000||£100,000||£300,000|
|Remaining Mortgage term (years)||20||20||30||30|
|Current Interest rate||5.54%||5.54%||5.54%||5.54%|
|Monthly payment before payment holiday||£462||£1,385||£462||£1,385|
|Monthly payment after payment holiday||£468||£1,404||£468||£1,404|
|Additional Capital Repayable at end of Mortgage Term||£1,384||£4,151||£1,384||£4,151|
|Increase to the total amount payable over remaining term.||£1,513||£4,540||£2,280||£6,840|
These examples are based on a 3-month full payment deferral. The actual increase in your payment will depend on your mortgage balance, your remaining mortgage term and your interest rate.
It’s important that all parties to the mortgage are aware of, and agree to, any support options we put in place. Before contacting us to discuss how we can help, please ensure you discuss this with everyone else named on the mortgage.
Our offices are closed right now and we are all working remotely, but you can contact us on:
By Telephone: 0344 257 0427 our lines are open Monday to Friday between 9am and 5.30pm (calls are recorded for training and monitoring purposes).
By Email: email@example.com We aim to respond to all email enquiries within 72 hours.