Payment Deferral Information: Extending a Payment Deferral


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 Deferrals (These may also be known as Payment Holidays). In addition, we can also assess whether other solutions would be more appropriate for you. 


Read on if you have already successfully applied for a full or partial Payment Deferral with us and believe you need to extend it. 

 

What is a Payment Deferral?

A Payment Deferral 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 Deferrals. If you have already had a Payment Deferral with us which has ended, or is about to end, and you are still experiencing issues with your finances as a result of Coronavirus, you may be able to request an extension to your Payment Deferral of up to a further 3 months, subject to a maximum of 6 months in total. Please note that your previous Payment Deferral history and when you apply may impact what Payment Deferral, if any, can be offered to you. Please contact us as soon as possible if you think you will require a Payment Deferral.

 

Under the current guidance, any new requests for a Payment Deferral Extension must finish by 31 July 2021.

 

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.


How does extending my Payment Deferral impact my monthly payments?

You may ask to extend your Payment Deferral for up to a further 3 months, provided you don’t exceed 6 months in total:

·       A full Payment Deferral means you won’t make any payments towards your mortgage.

·       If you choose a Partial payment Deferral, you can make reduced payments of any amount.


During the Payment Deferral extension 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 Deferral, the overall interest and the total amount you owe at the end of the Payment Deferral will be less than if you made no payments i.e. a full Payment Deferral.


At the end of your Payment Deferral extension, 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 by making lump sum payments. You can contact us at any point during the Payment Deferral 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 Deferral. Please note, interest will continue to accrue on the outstanding balance of the mortgage.


Representative Example: Full Payment Deferral


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 Deferral

£551

Monthly increase

£9

Total amount to repay without repayment Deferral

£130,120

Total amount to repay with three month repayment Deferral

£130,571



The Money Advice Service has a mortgage Deferral online calculator you can use to learn how a Payment Deferral would affect your mortgage payments.


If your account is in arrears

If your account is in arrears and you have already agreed a Payment Deferral with us, you can still apply to extend it for up to a further 3 months, provided you don’t exceed 6 months in total. Please note, this may not be the best choice for you, so we will call you to discuss whether other solutions might be more appropriate.  If an extension is agreed, your arrears balance will remain static during this period. We will continue to report your arrears balance to the Credit Reference Agencies, where appropriate, and, if in place, that you have an arrangement to pay. Once your Payment Deferral has completed, we will contact you to discuss your account and set up a new arrangement based upon your circumstances.

 

Any payments made during the Payment Deferral will be used to reduce your arrears balance. If this balance is cleared, if applicable we will reduce any fees, before reducing you outstanding capital balance.

           


Interest-only mortgage accounts

Once we send you confirmation of your new monthly payments and how a Payment Deferral extension 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 Deferral extension can still be considered.  After a Payment Deferral extension is completed, we will contact you to establish your plans in relation to repaying the mortgage.


BTL Customers

A Payment Deferral extension 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 Deferral extension, 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 extending a Payment Deferral the right option for me?

If you can afford to restart making your payments, please do so. If you believe you still need an extension, you can apply by 31 March 2021 to extend a full or partial Payment Deferral for up to a further 3 months, provided you don’t exceed 6 months in total.  Payment Deferrals must end by 31 July 2021.


There are alternative options available and Payment Deferrals 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 Mortgages and coronavirus: information for consumers and/or use the Money Advice Service’s Mortgage Deferral online calculator to learn how a Payment Deferral will affect your mortgage payments. 

How do I cancel a Payment Deferral?

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

How do I apply for a Payment Deferral extension?

If you HAVE NOT requested a Payment Deferral with us before, please click here for more information and to download an Initial Payment Deferral Application Form.


If you HAVE already successfully applied for a Payment Deferral with us and believe you need an extension for a full or partial payment Deferral for up to 3 further months, provided you haven’t had more than 6 months in total, please download a Payment Deferral Extension Application Form to complete and return this to us:


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 Deferral Extension Request

 

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

 

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

Send to:

 

Payment Deferral Extension 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.

 

What happens next?

Once we have received your Payment Deferral extension request 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 Deferral extension, or we will telephone you to discuss your request.

·       If your account is in arrears, other solutions may be better for you. Therefore, we will telephone you to discuss your request and the other solutions.

 

Please do not cancel your Direct Debit as we will amend this when we set up the Payment Deferral and your Direct Debit will automatically adjust to collect the higher amount once your Payment Deferral 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 Deferral to take effect. If your next payment is due within the next 10 days, your Payment Deferral may not take effect until the subsequent payment. We will send confirmation in writing.