TODAY is the last day for loan customers facing financial problems to apply for a three month vacation for mortgage, credit card or loan payments.
Lenders will stop offering the breaks starting in November, which means borrowers will have until October 31st to apply for one.
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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, auto finance, and pawnbroker loans.
Usually, payment interruptions are recorded in your credit file and can negatively affect future borrowing. However, earlier this year, credit agencies agreed that coronavirus freezing was not an option.
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Additional help will continue to be available for those who have problems starting November 1st. However, it will be tailored to the individual circumstances and noted in your credit file.
It should be noted, however, that if you’ve already taken three months of payment leave and request a second for the same product before the deadline expires, the rules will apply after October 31st, which means they will also be recorded in your credit history.
While it’s better than missing out on a payment without speaking to your lender first, Martin Lewis previously 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 with the deadline ahead, my standard” only needs to take “the addition of” when you need it or think you really need it soon, “as future help diminishes and this payment vacation is better than what for most will be available after October 31st. ”
MoneySavingExpert previously warned that a payment interruption could prevent you from taking out a mortgage, although it will not affect your creditworthiness.
The lenders can then see if you have paused payments through other methods such as 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 stricter local lockdown restrictions are in place is also likely to leave millions of families in debt, Citizens Advice warned earlier this month.
October 31st marks the end of four more government-sponsored coronavirus aid programs, including vacation.
Interest-free overdrafts are also nearing completion, while rules for free childcare are reintroduced.
A fifth of bosses expect to lay off 10% of workers by the end of the year – with legal and health workers among the most vulnerable.
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