Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

Lenders to stop offering payment breaks from November

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The measures were introduced to help households who are struggling financially due to the Covid crisis

October 31 is the last day for credit customers who are struggling financially to apply for a three month mortgage, credit card or loan payment holiday.

Lenders will stop offering the breaks from November meaning borrowers have until today to apply for one.

The temporary measures were introduced earlier this year to help households whose income has dropped due to lockdown restrictions.

The freezes can also be applied to insurance policies if you pay for them monthly, overdrafts, buy-now-pay-later, rent-to-own, car finance and pawnbroker loans.

Normally, payment breaks will be recorded on your credit file and can have a negative impact on any future borrowing, but earlier this year credit agencies agreed coronavirus freezes won’t be.

Extra help will still be available to those struggling from November 1 onwards but it will be tailored depending on individual circumstances and will be marked on their credit file.

It’s worth noting though that if you’ve already taken a three month payment holiday and you apply for a second on the same product before the deadline, the post-October 31 rules will apply meaning it will also be recorded on your credit history.

Borrowers still accrue interest throughout the break, which will cost them more in the long run as the balance will be higher than if they continued making the repayments.

MoneySavingExpert has previously warned that taking a payment break may actually stop you from getting a mortgage, even though it won’t affect your credit score.

It said that lenders can then see whether you’ve paused any payments through other methods, like Open Banking, which they can then use this information to decide whether or not they will lend to you.

There are fears that households are going to have to tighten their belts even further in the coming months as hundreds of thousands of workers are expected to lose their jobs when furlough ends.

A lack of tiered support for people who live in areas where there are tougher local lockdown restrictions is also expected to push millions of families into debt, Citizens Advice warned earlier this month.

October 31 marks the end of four other government-backed coronavirus help schemes, including furlough.

Interest-free overdrafts are also due to finish, while free childcare rules will come back.

A fifth of bosses expect to axe 10% of workers by the end of the year – with legal and health workers among those most at risk.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.