Payment breaks offered by lenders have now ended under the existing measures and from November 2020 onwards are being replaced by ‘Tailored Support’
Note: Following the recent announcement that there will be a 4-week lockdown in England, the Financial Conduct Authority have announced proposals to extend payment holidays on mortgages and consumer credit for those who haven’t yet had a payment holiday. The advice herein may once again change.
Note – if your income has been affected as a result of being furloughed or made redundant and you are in financial difficulties with several creditors, you can also explore a Low and Grow DAS from January 2021 onwards.
Payment Breaks replaced by Tailored Support
You’ll be eligible for ‘Tailored Support’ measures in Scotland if you fall into one of these two categories:
- Your first or second payment holiday expires after 31 October and you can’t resume your normal repayments.
Once the existing payment holiday expires under the old scheme, you’ll move on to the Tailored Support schemes.
- You experience payment difficulties after 31 October.
This applies whether or not you’ve already previously used payment holidays in the past, or if you now find yourself in payment difficulties for the first time.
Does Tailored Support affect my credit rating?
Yes. Tailored Support from a lender, whether that’s reduced payments, a further payment break, or a repayment plan will be recorded as normal on your credit report (see how to check your credit reports for free) and could therefore affect your chances of getting credit in future.
It had been agreed previously that payment breaks would not have a detrimental impact on an individuals credit rating.
Mortgage Tailored Support guidance in Scotland
If you’ve already taken 6 months of payment holidays on your mortgage, then you’ll be moved on to ‘tailored support’.
However, what that means to you will depend on your unique financial circumstances. How settled your finances are will also have an impact. You will need to check with your lender directly, The following are some of the financial difficulties measures you may be offered, though lenders are free to offer other solutions if something else works better for your particular circumstances:
- A change to your mortgage type.
You could be switched to an interest-only mortgage or changed to a product with a higher interest rate.
- An extension to your mortgage term.
This is essentially like a remortgage and means you’ll pay less each month, however, you are then borrowing over a longer period, you’ll pay more long term as a result.
- A period of reduced payments.
If you can pay something towards your mortgage, but can’t make the full contractual repayment, your lender may agree to you making reduced payments. Again, this measure is likely to be for the short-term only.
- A payment deferral.
This is likely to be a short-term measure only and may be offered if your circumstances are still changing, and you’re not able to commit to a longer-term measure such as changing your mortgage type or length.
Credit Card Debts – Unsecured Tailored Support guidance in Scotland
There are an estimated 100,000 people across Britain with at least one credit card currently held on payment breaks under the previous system.
Credit card debts and other unsecured debts are covered under the tailored support system. However, the outcome will depend on your own circumstances. You may be offered one or more of the following solutions.
- Short term payment deferral
- Short term reduced payments
- Frozen/waived interest
- Repayment plan
- Consolidation loan from the same lender
Special rules apply for debts such as an overdraft debt where interest may be frozen, waived – or transferred to another product from the same lender such as a personal loan or credit card.
If you have a car finance agreement, you can also apply for tailored support from your lender.
Help with debts in Scotland
Trust Deed Scotland® understands that for many people with unaffordable debts in Scotland, making contact with creditors is a difficult task. Especially when those debts have already been passed to a debt collection agency.
Where possible, you should attempt to make contact with your creditors, however, if you feel that you cannot manage this and need help with your debts in Scotland then we recommend that you make contact with a qualified money advisor.
Our friendly, non-judgemental Scottish debt help team have been helping people with unaffordable debts most recently throughout the Covid pandemic and longer-term since 2009. We’ve given advice to thousands of people from all over Scotland and over 600 people have left a debt help review between 1st March 2020 and 31st October 2020. With over 3,000 Trustpilot reviews, we’re the No.1 rated in Scotland.
If you need help with debts in Scotland now, call us on 01412210999 or get started by using our Trust Deed Wizard® tool.