Payment Breaks

Mortgages and Secured Loan Payments

If you are experiencing difficulties paying your mortgage (or any other secured loan), you should speak with your lender.

Most lenders have now committed to showing more forbearance, which means being more flexible, for customers that have been effected by the Covid 19 Crisis.

It is likely they will do this by offering a payment break on any payments due for up to three months. 

During that period, therefore, providing you can get an agreement with your lender, they should be okay if you miss some payments. It is important to note, however, you must have their agreement. If you don’t have their agreement, this is not a payment break, but a missed payment.

If you “miss” any payments, it is likely it will be reported as such to credit reference agencies, and this may damage your credit rating. Alternatively, if you get the agreement of your lender, this will not be a “missed” payment, and should not damage your credit rating.

During a payment break, no charges should be applied for missed payments, although interest and charges are likely to still be applied. 

Credit Cards, Loans, Store Cards etc.

You can also seek payment breaks on credit cards, personal loans and store cards.

The UK’s Financial Regulator, the Financial Conduct Authority, has said it will bring guidance forward that will require these lenders to give you a payment break if you are affected by the Covid 19 Crisis. 

These payment breaks will not stop interest and charges being applied, unless your lender agrees to put these on hold also, so your debts may increase during a payment break. 

Again it is important to remember,  you only have a payment break if your lender agrees to it, so if you just miss a payment, this is not a payment break, but a missed payment and will affect your credit rating. You may also have missed payments applied to your debts.

Hire Purchase/PCP Agreements and Payday Loans

The Financial Conduct Authority has indicated it will not require these types of lenders to give you a payment break. However, that is not to say they may not agree to if you contact them.

You should, therefore, contact these lenders also if you believe you will not be able to make your normal monthly payments and ask them if they can help you. 

 

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