Payment Holiday Information: Applying for the first time

Introduction

We understand that these are unsettling times for many of our customers and as your mortgage provider, we are working hard to support customers experiencing issues with their finances as a result of Coronavirus. Following updated guidance from the Financial Conduct Authority, we can continue to offer payment holidays (These may also be known as a Payment Deferral).  In addition, we can also assess whether other solutions would be more appropriate for your circumstances.


What is a Payment Holiday?

A payment holiday is a break from paying your mortgage. You can ask to take a break of up to 3 months if you have been impacted by Coronavirus and we are able to offer full or partial payment holidays.


It won’t adversely affect your credit file, so there’s one less thing to worry about. However, please be aware that lenders may take other information into account when making lending decisions in the future.


For free and impartial advice about Payment Holidays, the Money Advice Service, set up by the UK government, has published a
Guide to Coronavirus Mortgage Payment Holidays.


How does this impact my monthly payments?

You may ask for either a full or partial payment holiday for up to 3 months.

·       A full payment holiday means you won’t make any payments towards your mortgage.

·       If you choose a partial payment holiday, you can make reduced payments of any amount.


During this period, interest will continue to be charged and the total amount of interest you pay over the term of the mortgage will increase. If you are able to make some payment each month i.e. a partial payment holiday, the overall interest and the total amount you will owe at the end of the payment holiday will be less than if you made no payments i.e. a full payment holiday.


At the end of your payment holiday, we will recalculate your monthly payments over the remaining term of your mortgage taking this increased balance into account:

·       For repayment mortgages, the payments and interest that have not been paid are spread over the remaining term of your mortgage, resulting in a new monthly payment repaying the balance in full by the end of the term.

·       For interest-only mortgages, the payments will be recalculated based on the new balance, but you will need to put in place alternative arrangements to ensure that your increased mortgage balance is repaid in full by the end of the term.


There are other ways to repay the missed payments. For example, we can arrange for you to pay them over a shorter period of time or make lump sum payments. You can contact us at any point during the Payment Holiday to discuss the options available to you.


If your mortgage term has expired, your payments will resume at the same amount as you were paying before you took a payment holiday. Please note, interest will continue to accrue on the outstanding balance of the mortgage.


Representative Example: Full payment holiday

Current outstanding mortgage balance

£100,000

Interest rate

2.75%

Term remaining

20 years (repayment mortgage)

Current monthly payment

£542

New monthly payment after payment holiday

£551

Monthly increase

£9

Total amount to repay without repayment holiday

£130,120

Total amount to repay with 3-month repayment holiday

£130,571

 

The Money Advice Service has a mortgage holiday online calculator you can use to understand how a payment holiday would affect your own mortgage payments.


If your account is in arrears
If your account is in arrears, a payment holiday may not be the best solution for you and other options may be more suitable. If you would like to discuss other options, please contact us. Your arrears balance will remain static during a payment holiday. We will continue to report your arrears balance to the Credit Reference Agencies and, if in place, that you have an arrangement to pay. Once your payment holiday has completed, we will contact you to discuss your account and set up a new arrangement based upon your circumstances.


You may find the following two links useful for understanding what support is available to you.

·       Financial Conduct Authority’s “Dealing with financial difficulties during the Coronavirus pandemic

·       Money Advice Service Coronavirus Support

 

Interest only mortgage accounts

Once we send you confirmation of your new monthly payments and how a payment holiday has impacted your mortgage account, you will need to review your original repayment vehicle or put plans in place to ensure that you can repay the full balance of the mortgage by the end of the term. You may want to seek independent advice. Please see our useful links which details some organisations - you can access this HERE


Term Expired Loans

In the event that your mortgage term has expired, a payment holiday can still be considered.  After a payment holiday is completed, we will contact you to establish your plans in relation to repaying the mortgage.


BTL Customers

A payment holiday is available to Buy-to-Let landlords whose tenants have lost income because of the impact of Coronavirus. Landlords are expected to pass on this relief to their tenants to ensure that they are supported during this time.


Lenders Insurance Policy (LIO)

If you are charged a Lenders’ Insurance fee as part of your mortgage payment, this continues to be charged to your account on a monthly basis during the payment holiday, but you will not incur any interest on these sums during this time.  If you would like to make payments towards this, please contact us to discuss options available to you.


Is a Payment Holiday the right option for me?

If you can afford to keep making your monthly payment, please continue to do so. If your circumstances change, you can apply for a payment holiday up to 31 October 2020.


There are alternative options available and payment holidays aren’t always the most suitable solution for everyone.  We can also offer more tailored support according to your individual situation if you wish to undertake a full assessment of your circumstances.


You can seek independent advice from agencies to ensure this is the best option for you. Please see our useful links which details some organisations - you can access this
HERE. Additionally, you might wish to view the FCA’s Advice for Consumers re Mortgages and Coronavirus and/or use the Money Advice Service’s mortgage holiday online calculator to learn how a payment holiday will affect your mortgage payments.

 

How do I cancel a Payment Holiday?

You may cancel a full or partial payment holiday at any time. To do so, please call us.

 

How do I apply for a Payment Holiday?

If you already have a payment holiday with us and believe you need to extend it, please click here for more information and to download a Payment Holiday Extension Application Form to complete and return to us.


If you wish to apply for a payment holiday for the first time, please download a Payment Holiday First-Time Request Form to complete and return this to us by:

Email

Post

Send to:

 

This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

Please ensure you put in the subject line your:

 

·       Mortgage Account Number

·       Surname

·       Title – Payment Holiday Request

 

Please ensure you complete the form in full including the mortgage account number. If you hold more than one more account with us, please provide all mortgage account numbers held.

 

This will allow us to identify and manage your request more efficiently.

Send to:

 

Payment Holiday Request

Engage Credit

Harman House

1 George Street

Uxbridge

UB8 1QQ

 

 

 

Please note in relation to Email;

E-mail transmissions cannot be guaranteed to be secure, complete or error-free. Pepper (UK) Limited, trading as Engage Credit, does not accept any liability in the event that e-mail transmissions are intercepted, corrupted, lost, destroyed, arrive late or contain incomplete information or viruses.  Anyone who communicates with Pepper (UK) Limited, trading as Engage Credit by e-mail is taken to understand and accept the above risks.

For details of how we process your personal information, please refer to our Privacy Notice which can be accessed HERE


How do I apply for a Payment Holiday Extension?

If you have already successfully applied for a Payment Holiday and you believe you need an extension, please click here for more information and to download a Payment Holiday Extension Application Form to complete and return to us.

 

What happens next?

Once we have received your payment holiday request either by post or email, you will receive an email to acknowledge receipt. 

 

·       If your account is up to date, we will send you a confirmation letter within 7-10 days once we have set up your payment holiday or we will telephone you to discuss your request.

·       If your account is in arrears, you may wish to call us to discuss other solutions which may be better for you. However, if you don’t wish to discuss other solutions, we will send you a confirmation letter within 7-10 days once we have set up your payment holiday or we will telephone you to discuss your request.

 

Please do not cancel your Direct Debit as we will amend this when we set up the payment holiday and your Direct Debit with automatically adjust to collect the higher amount once your payment holiday has expired. If you pay by another method, you will need to amend your payment.

 

Please be aware that we are busier than usual and it can take between 7-10 days for your payment holiday to take effect. If your next payment is due within the next 10 days, your payment holiday may not take effect until the subsequent payment. We will send confirmation in writing.