Around 2.5 million people took a payment break on their mortgage, according to UK Finance
The majority of homeowners who were plunged into financial difficulty at the start of the coronavirus outbreak have resumed making mortgage repayments following months of support from banks, but a significant number of people are clearly facing financial hardship.
With 85% of UK adults having at least one loan of some type, payment holidays have been crucial for people whose finances have been adversely affected by the coronavirus crisis.
A sudden fall in income while on furlough or after redundancy had an immediate and unexpected impact on their ability to pay the bills.
Some 2.5 million people took a payment break on their mortgage since the start of the pandemic, while others have deferred repayments on credit cards and personal loans, according to figures from UK Finance.
Some 162,000 mortgage payment deferrals are still in place now, which could soon prove to be a major problem for some people, as the government’s mortgage holiday scheme is due to end on 31 October, leaving thousands of homeowners facing the threat of repossession.
Nisha Vaidya, mortgage expert at Bankrate UK, said: Many of those people who have deferred mortgage repayments during the pandemic, may face uncertain times as they try to put new arrangements in place before the end of this month. The fact that the furlough scheme is also ending at the same time has likely made things increasingly difficult for many of the homeowners already in a precarious financial position.
The first step for anyone coming to the end of a payment holiday should be to speak to their lender about their options, she said.
Lenders recognise that many borrowers face financial difficulty, and that is why they will offer support to help people struggling financially, in accordance with the latest guidance from the FCA, although those looking to switch to a new deal and remortgage may find that their options are limited in the current climate.
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