The ongoing COVID-19 pandemic is having a significant impact on all aspect of individual’s lives, not least their personal finances.
To help you make sense of the current situation, we have prepared a short, helpful summary:
During this crisis, some households will see a decline in their household income, which may make paying bills a challenge.
To help with this, lenders have agreed with the Government to offer tolerance and help on mortgage payments.
Those struggling with their mortgage payments will be given a three-month ‘holiday’, allowing customers a temporary break from making payments during this time.
Banks are offering different solutions to this ‘holiday’, with some extending the term of the mortgage, while others are adjusting payments so that unpaid months are spread over the life of the mortgage, meaning that borrowers experience a very small uplift in future payments. Be aware that the shorter the term left on your mortgage the larger the increase will be in your future monthly payments.
It is sensible to speak with your bank in advance if you anticipate that you may need to make use of this facility so that you are clear on the terms being offered.
Lenders may wish to confirm the following key points to satisfy their eligibility criteria for a mortgage payment holiday:
- Your finances have been affected by Coronavirus
- You are up to date with your monthly mortgage payments and not in arrears
- You have consent from everyone named on the mortgage
Some lenders have already contacted mortgage holders to offer a mortgage holiday, which in some cases can be requested online via an application form or a fast track approval process. Requesting a holiday should not affect your credit rating.
Loans and credit cards
Although the Government hasn’t asked banks to help those with loans and credit card payments, many banks have already announced that they will offer support to those struggling with debts or a loss of income.
Most banks and credit card firms have confirmed with that they will allow emergency credit limit increases if necessary, while others are offering repayment holidays and a few will waive fees for missed payments.
During these uncertain times, it is recommended that you speak with all lenders to see what assistance is offered instead of having missed payments without permission, which may incur fees and affect your credit score.
Savings and investments
Banks are now making it easier to access fixed-rate savings accounts without penalty to help those affected by the pandemic.
Many of the high street banks are offering this facility to savers, so it is worth checking with your bank or building society to see whether your money can be accessed more easily.
During uncertain economic times such as these, if you hold any investments it is important that you do not panic and seek specialist advice from an independent financial adviser to make sure that your investments are not adversely affected.
The Government has introduced new legislation that has suspended the eviction process for tenants for at least three months to help those struggling with their rent.
To ensure buy-to-let landlords aren’t adversely affected they will be able to make use of the same three-month mortgage holiday as regular lenders.
Here to Help
The Government continues to make new announcements daily and has said it will do ‘whatever it takes’ to help individuals through this crisis.
If you are concerned about your finances you should speak to a professional financial adviser to see what options may be available to you. To find out how our dedicated team can help you, please contact us today.