The next few months will be a crucial time for many households. In response to the announcement of England’s second national lockdown, the regulator confirmed that mortgage holders who have not yet taken a payment holiday now have until 31 January 2021 to do so – a change of the original deadline of 31 October 2020.

For borrowers who currently have an initial payment holiday in place, or have resumed repayments after taking one, they have until the same date to request another break.

While payment deferrals have provided much-needed relief for millions of consumers, the coming months will be a turning point for many as they decide their next steps – that is, whether they apply for this support package again, or opt for another solution entirely.

However, it is likely that many of those facing further financial hardship as a result of the ongoing Covid-19 crisis will be unsure of the alternative measures available to them which could help over the long-term.

As a result, many borrowers who are eligible to take a payment holiday between now and January next year may think that this route is their only option. However, there are other solutions available which may be better suited to their needs. These other options may also be beneficial to those customers who do not qualify to take another payment holiday but require further assistance in the near-term.

This is where having the support of a professional adviser will be invaluable for customers – particularly those who either continue or start to feel the financial impact of Covid-19 over the next couple of months.

What are the other options for struggling customers?

During times of uncertainty, it becomes more and more important for brokers to go back to basics and ensure they are communicating regularly with their customers. Extra guidance and support will be greatly welcomed by many borrowers over the coming months.

By reviewing customers’ circumstances, advisers will be able to confirm whether they need to take another payment holiday or if alternative solutions would be better for them.

In cases where further payment deferrals might not be necessary, such as if a client has returned to full-time work after being furloughed, it is important that advisers confirm a repayment plan with customers so that they are clear and confident with paying back the capital.

Once this is agreed, revisiting the client’s mortgage to reduce their overall outgoings would be a sensible next step, and there are various routes which advisers could go down to lower monthly repayments.

One option would be to remortgage onto a lower rate product – providing the customer is eligible. If they are still in the fixed-rate period, advisers should confirm if heavy early repayment charges can be avoided on their current deal and if they can switch to an alternative that would be better for them financially.

Extending the mortgage term is another option. Some lenders allow this to enable borrowers to spread the cost of their repayments and reduce monthly costs.

In some cases, moving to an interest-only mortgage may be the best option, though this will not be suitable for all borrowers, given the typically longer-lasting financial implications. Advisers should therefore confirm with borrowers the feasibility of repaying the capital in the future before proceeding with an interest-only plan, and ensure the customer truly understands the product they would be switching on to.

Check your clients are covered

As this crisis continues, cover will be a lifeline for many families and it is in an adviser’s best interest to ensure their clients’ finances are adequately protected.

Some clients who are facing further financial hardship, particularly if their income has taken a hit during Covid-19, may be considering reducing their cover or worse, cancelling their policy altogether.

Without the expertise of a professional, these customers may not be aware of alternative options. For example, some providers can remove ‘add-ons’ on certain policies, while other products might come with payment break options.  Again, advisers are well placed to offer their expertise over the coming weeks, ensuring that clients don’t resort to removing their financial safety net.

During a pivotal time for many borrowers, it is human nature to look for reassurance – and a friendly face. Advisers will continue to be crucial in providing peace of mind to customers and talking them through their options, allowing them to make informed decisions. This will ensure that borrowers will be in a better position over the longer term – and advisers will have really demonstrated their value.

Vikki Jefferies, Proposition Director, Primis Mortgage Network