Help for struggling mortgage borrowers confirmed – but Martin Lewis says it's 'a thin sandwich'

The support you can expect if you're struggling with your mortgage

While there were no new measures of support announced in the FCA guidance, it does reiterate the options that can be offered by mortgage lenders. It also sets out that the FCA expects lenders to help struggling homeowners (including those who have and haven't missed repayments) and to be transparent about the range of options that they can consider. 

In the first instance:

1. If you're worried about keeping up with your mortgage repayments, you should contact your lender as soon as possible. Don't wait until you've missed a payment to get in touch. The earlier you reach out, the broader the range of options that could be available to you.
   
   
2. Simply reaching out to your lender to talk about your options will NOT impact your credit file or score. According to the FCA, nearly 50% of struggling borrowers mistakenly believe that it will. However, where you ultimately agree to mortgage support, this can impact your file.

After an assessment of your incomings and outgoings, a lender might offer:

• A temporary switch to an interest-only mortgage. Here you no longer pay off the actual loan itself, just the interest that's accruing. Where the switch to interest-only is permanent rather than temporary, there will likely be more hurdles to jump through – such as proving you'll be able to repay the mortgage at the end of the term.
  
  
• A temporary break from repayments. This might be in part or in full. Interest will most likely continue to accrue on your mortgage balance while you are not making repayments. 
  
  
• An extension to the term of your mortgage. For example, from 25 to 30 years. This is designed to lower your monthly repayments, though you will end up paying more over the life of the mortgage. Also bear in mind that if you intend to extend the term on a temporary basis that you will likely need to undergo an affordability assessment to revert it back to the original term. 

Do note that lenders will not necessarily be able to offer all of the three options above. Ultimately, the lender will decide which option (if any) to offer you based on an overview of your circumstances. It might also have other ways of helping. 

The FCA is also encouraging firms to think about how they might handle large volumes of people looking for help to smooth out payment increases - for example, by offering some borrowers automated options quickly and online. 

For more help if you're struggling with your mortgage payments, see our full Mortgage arrears guide.