Forbearance is support that a lender can provide to customers to assist them in a period of financial difficulty or through a change in circumstance. Most forbearance is designed to be temporary in nature.
It is important to understand that while forbearance is meant to provide temporary support to help you get your finances back on track, there are potential costs and other considerations you should be aware of. If the amount you pay in a month is less than your normal monthly instalment, your total loan costs will increase as the amount you borrowed will be outstanding for a longer period of time (even if the loan is repaid within the original term).
Below is a list of the support we may be able to offer. Please select the below options for a brief explanation as well as points of consideration and their benefits.
To help with budgeting, please click here for a copy of our Income and Expenditure forms. Once completed, please feel free to send this in to us, we will be able to review before discussing what support we are able to offer.
Please note that discussing available forbearance options will not have a negative impact on your account or credit File. Only your actual payment history and the loan balance are reported. If you are experiencing financial difficulty or struggling to make your payment, it is always better to contact us to discuss your circumstances to determine what forbearance support may be available and appropriate. It is important to understand that while forbearance is meant to provide temporary support to help you get your finances back on track, there are potential costs and other considerations you should be aware of.
If you are going through any difficult circumstances, we would always recommend that you seek free independent financial advice. By seeking advice, you will be able to speak to an expert who can offer support and guidance. You will also be able to find out if you are entitled to any further support or benefits. We have entered a partnership with Payplan. Please see here.
Step One Finance will only permit requests for a payment holiday in extreme circumstances at the direction of the FCA or other relevant government authority. From time to time, there may be Government initiatives and/or support schemes designed to assist customers with mortgage payments as an alternative to repossession. In accordance with MCOB 13.3.4R, SOFL will make customers aware of these schemes. This will generally be provided within the National Homelessness Advice Service leaflet sent to customers as part of the Pre-Action protocol process and by referring them to free debt advice. The UK Government has announced support for borrowers who are struggling with their mortgage payments. You could be eligible for the mortgage charter support if you’re a residential mortgage customer. Please contact your first-mortgage provider for further details on this.
An agreement between lender and borrower to accept no payment being made to their account for a specified month or period of time.
An agreement between lender and borrower to accept a reduced & affordable payment for a specified month or period of time. This could include paying the interest proportion of an instalment.
In exceptional circumstances an agreement between lender and borrower to have their interest rate amended on a temporary basis. This would mean paying less interest for payments made during the agreed period.
Once your finances are back on track, an Arrangement To Pay is an agreement where you make a monthly payment greater than your normal monthly instalment amount to clear any outstanding arrears. Demonstration of affordability has been provided to allow for the arrangement to be set up.
Once your finances are back on track, a Norgan Arrangement To Pay is an agreement where you make a monthly payment greater than your normal monthly instalment amount to clear any outstanding arrears. The amount paid would be based on a calculation to confirm the minimal amount needed each month to ensure that all arrears and fees/charges are cleared within the remaining term.
The term ‘Norgan’ comes from a court case of Cheltenham and Gloucester Building Society (C&G) Vs Mrs Norgan and her husband in 1986. Mrs Norgan borrowed £90,000 for her husband’s business over a term of 22 years. The mortgage was secured on the family farmhouse however due to Business difficulties, by April 1990 Mr and Mrs Norgan fell behind. Because of this C&G sought possession, and this was suspended on several occasions. Before this case, 4 years was usually given as a ‘reasonable’ time to repay the arrears. On appeal, this case tested that time frame, and it was judged that a reasonable time should in fact be the term of the mortgage. This meant that the borrowers would have further time to address the owed outstanding amount providing that the arrears would be cleared within the remaining term.
Once your finances are back on track, a Sub Norgan Arrangement To Pay is an agreement where you make a monthly payment greater than your normal monthly instalment amount to clear any outstanding arrears. The amount paid would be based on a calculation to confirm the minimal amount needed each month to ensure that all arrears are cleared within the remaining term but this will not cover any fees/charges.
For an explanation of the origin of the term ‘Norgan’, please refer to ‘Arrangement to Pay – Norgan’.
A promise to pay is an agreement with a customer to make one or more payments on a specified date by a specified payment method.
An agreement between lender and borrower that despite having arrears/fees and charges on account, the borrower will only make payment of the contractual monthly instalment for agreed duration until finances permit an increased payment.
A request from a borrower to either take in a lodger or rent out their residential security address.
A loan term extension is where the remaining loan balance is repaid over a longer period than the original term.
A voluntary sale is when a customer decides that there is no realistic chance of being able to maintain loan payments and/or clear their arrears either currently or in the future. It is considered that a voluntary sale will likely achieve a better return than a distressed sale upon repossession which may increase any eventual shortfall (difference between sale price and outstanding mortgage balances).
A process where an arrears balance is incorporated into the outstanding principal balance and repaid as part of Contractual monthly instalment.
Please note that Step One Finance does not charge up-front fees for any loan enquiries or applications. You should be wary of any parties purporting to arrange a Step One Finance loan who are seeking to charge up-front fees. Please contact us if you have any doubts regarding a Step One Finance loan application. Customers can also obtain additional information on the FCA’s website on the dangers of Loan Fee Fraud by clicking here.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT IF YOU ARE EXTENDING THE TERM OF THE DEBT YOU MAY BE INCREASING THE TOTAL AMOUNT YOU NEED TO REPAY.