FCA Guidance For Mortgages During Coronavirus Crisis

 

In dealing with the Coronavirus crisis, it is imperative to follow guidelines and rules from specialists and experts. This applies to health matters, social distancing recommendations, and on how individual sectors are responding to the Coronavirus crisis.

Understandably, many people are looking for assurance regarding finance and mortgage payments during the Coronavirus crisis. This is why it is vital to heed advice and recommendations from the Financial Conduct Authority (FCA).

What is the FCA, and what do they do?

The FCA is the conduct regulator for 59,000 financial services firms and financial markets in the United Kingdom. The FCA is also the prudential regulator for more than 18,000 of these companies. The FCA was established on 1 April 2013, taking over from the Financial Services Authority.

The Financial Conduct Authority is the conduct regulator for 59,000 financial services firms and financial markets in the UK and the prudential regulator for over 18,000 of those firms.

The FCA has issued a broad range of guidance on how they expect mortgage lenders and administrators to support clients and customers in the current situation. Therefore, it is imperative mortgage holders, brokers, lenders and anyone with interest in the market follow the guidelines.

Applying for a payment holiday

Anyone who is experiencing, or who expects to experience, difficulties in paying their mortgage due to the Coronavirus should contact their lender. Mortgage holders shouldn’t cancel their direct debit without speaking with their lender.

Any mortgage holder who cancels their payment without authorisation will be deemed to have missed their payment. This may be reflected on the mortgage holder’s credit file, which could hamper their ability to re-mortgage or arrange credit in the future.

Unless the lender has stated otherwise, interest will be charged during the mortgage payment holiday. It is up the lender and mortgage holder to agree upon a manageable way to cover the missed payments.

No one knows how long the current circumstances will run for. Therefore, a lender who experiences a more extended period of being unable to pay their mortgage should contact the lender. The lender may be able to offer an extended holiday period or may offer alternative arrangements.

If you are still not able to make your full mortgage payments due to circumstances relating to Coronavirus, then the lender may offer you a further payment holiday, or other arrangements, if these are appropriate to your circumstances.

Anyone who isn’t experiencing difficulties in paying their mortgage should not apply for a mortgage holiday.

Anyone who was struggling with mortgage payments before the Coronavirus crisis or whose struggles to pay their mortgage don’t relate to the Coronavirus, should contact their lender. A lender may be able to offer other solutions or guidance for people in this position.

No matter the reason, it is best for a mortgage holder to engage their lender with concerns as quickly as possible.

As circumstances change, guidance might be updated, so mortgage holders should stay up to date with information. However, it is clear the FCA recommends lenders and mortgage holders communicate quickly and clearly.

[1] https://www.fca.org.uk/about/the-fca
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