STRUGGLING households may be allowed to extend mortgage holidays by a year to 18 months it's understood.
Chancellor Rishi Sunak announced in March that lenders had to offer three month mortgage repayment holidays to coronavirus-struck households.
⚠️ Read our coronavirus live blog for the latest news & updates
As of April 28, 1.6million payment freezes has been granted, according to banking trade body UK Finance – accounting for around one in seven UK mortgages.
But The Times reports that industry insiders are now considering extending mortgage holidays for some.
It's thought borrowers could be split into three groups; the first are those who can return to normal repayments after three months, the second have a good history of repayments but need the freeze extended in the short-term, and the third are those with no real prospects of repaying who may need debt advice.
The paper reports the measures are currently being looked at by regulator the Financial Conduct Authority (FCA) in a bid to prevent borrowers from defaulting and homes from being repossessed.
How to cut your bills
IF you're struggling financially, you might be able to cut the cost of your bills to help you get out of the red.
Council tax: You can apply for a council tax reduction on the Gov.uk website but you'll need to meet certain criteria. Your bill could be cut by as much as 100 per cent if you’re on a low income or claim benefits. Carers who look after someone in the household for at least 35 hours a week are also exempt from paying.
Water: Households might be able to save money by getting a water meter but it all depends on how much you're using. To check if it's finacially worthwhile, use the Consumer Council for Water's free ater meter calculator.
Rent: If you have the space available and your landlord or local authority says it's ok to do so, you might want to consider getting a flatmate. Not only will you split the cost of the rent, but also the other bills.
Hire purchase: If you're struggling to make your repayments on your hire purchase, you can usually end the contract by returning the goods. You will have to pay all the instalments due up to the time you end the agreement but this will limit the amount you owe. Contact Citizens Advice for free for more help with this.
Gas and electricty: MoneySavingExpert says families can save £330 on average by switching from Standard Variable Tariffs (SVTs) to a better rate. Use a comparison site such as MoneySuperMarket or Energyhelpline to see what deals are available.
Mortgage: If you get into debt with your mortgage payments, don't wait for your lender to chase you. Work out what you can afford using the Citizens Advice budgeting tool so you can discuss your payment options moving forward with your mortgage provider.
Secured Loan: Your secured loan might be covered by the Consumer Credit Act and if it is, you may be able to apply for a Time Order. This is a special agreement by the courts allowing you more time to make payments. Secured loans not covered by the Consumer Credit Act include gas, electricity or water meters, payments that need to be written off in full, mortgages, credit union loans, loans from an employer and some short term trade agreements.
County Court Judgements: If you receive a County Court claim form talk to a free debt advice service straight away. This includes Citizens Advice (0808 800 9060), StepChange (0800 138 1111) and the National Debtline (0808 808 4000).
TV licence: Some households are eligible for a reduced fee or free TV Licence. Pensioners over the age of 75 currently get a free TV licence, although this is due to change later in 2020. Check here to see if you are entitled to a reduced or free rate.
It follows the Bank of England warning that 1.5million jobs could be lost as the UK faces worst its worst ever recession.
One banker told The Times: “The last thing everyone wants is a repeat of the 1980s and 1990s, kicking families out onto the streets.”
But experts are said to be concerned about extending repayment holidays as while repayments are frozen, interest still accrues in the meantime, which means repayments will rise once the freeze ends.
UK Finance says a three-month payment holiday will add just over £9 a month onto the cost of the average £132,128 mortgage.
It told The Sun lenders are looking at options for those who may need further support once their three-month mortgage holiday has expired, but it wouldn't go into the details of what's on the table.
Other measures are thought to include switching repayment mortgages to interest-only, so borrowers only repay the interest and not the capital for a year, and allowing borrowers to make 50 per cent of repayments for a year.
A UK Finance spokesperson said: “UK Finance is working with the government and regulators to find the best solutions for all as the crisis continues.
"All providers are ready and able to offer support to their customers who are impacted directly or indirectly by Covid-19.”
The Sun has contacted both the FCA and we'll update this story if we get a response.
You can use MoneySuperMarket's mortgage holiday calculator to work out how deferring payments will affect you.
And here's how to apply for a mortgage holiday if you're struggling.
Source: Read Full Article