MARTIN Lewis has warned troubled borrowers that they only have 10 days to apply for three month payment leave.
Mortgage, credit card, loan and auto finance borrowers who are unable to make monthly repayments due to the coronavirus crisis must request a break until October 31.
Check out our Coronavirus Live Blog for the latest news and updates
The consumer guru published the reminder in today’s MoneySavingExpert (MSE) newsletter.
The temporary measures were introduced earlier this year to help households whose incomes have fallen due to lockdown restrictions.
The freezes can also be applied to insurance policies if you pay them monthly, overdrafts, buy-now-pay-later, rent-to-own and pawnbroker loans.
Do me a favor: please SHARE this post.
Usually, payment disruptions are recorded in your credit record and can negatively affect future borrowing. However, earlier this year, credit agencies agreed that coronavirus freezing was not an option.
Additional help will continue to be available for those who have problems starting November 1st. However, it is tailored to the individual circumstances and noted in your credit history.
It should be noted, however, that the rules will apply after October 31 if you have already taken three months of payment leave and apply for a second for the same product before the deadline, which means that this will also be noted on your credit file.
While it is better to miss a payment without speaking to your lender first, Martin warned that you should only request a vacation when you really need it.
Borrowers will continue to receive interest throughout the hiatus, which will cost them more in the long run as the balance will be higher than if they continued to make repayments.
For example, if someone pays £ 600 per month on a mortgage with a remaining term of 12 years takes a three month vacation, they will typically have to repay the remaining amount over 11 years and nine months at an interest rate of £ 616 per month.
He said, “So unless you really need a three month vacation, don’t or take a shorter break or make voluntary repayments if you can.
“However, if you are having problems apply now and get the help you need. And since the deadline is running out, my standard “only needs to take” the addition of “when you need it or think you really need it soon”. as future aid diminishes and this payment vacation is best than the one that will be available after October 31st. ”
MSE previously warned that taking a break in payments could prevent you from taking out a mortgage, although it will not affect your creditworthiness.
They said that then lenders can see if you’ve paused payments through other methods like open banking. They can then use this information to decide whether or not to give you credit.
There are fears that households will have to tighten their belts in the coming months as hundreds of thousands of workers are expected to lose their jobs when the vacation ends.
A lack of tiered support for people living in areas where there are stricter local lockdown restrictions is also likely to leave millions of families in debt, Citizens Advice warned yesterday.
–
