Below we list the immediate changes you can make to either buy yourself some breathing space, or to see your monthly spending lower instantly. We recommend that you read through all of them and note down where you think you can or should take action.
Important: This is a fast-changing situation. We will be updating this page with relevant information, as and when it’s available to us. Please send us an email via [email protected] if you can’t find the answer to your coronavirus-related questions in this guide (please note that we unfortunately won’t be able to respond to every email, but we will try our best).
If you’re a homeowner and are struggling to make your mortgage repayments due to the coronavirus, there is some good news for you. The UK government and in particular the Chancellor are working around the clock to ensure that people living and working in the UK experience minimal financial hardship during these challenging times.
As part of this all major UK banks have now confirmed that they will offer something called ‘forbearance’, which is another word for increased tolerance and help. It isn’t new for banks to offer payment holidays on a case-by-case basis when their customers temporarily cannot keep up with mortgage and interest payments. However, we have never seen the need for this on such a large scale, which is why the government has urged banks to give their ‘forbearance commitment’. These payment holidays aren’t underwritten by the government- the banks are offering it themselves to help their customers make ends meet over the coming months. These payment holidays, as they were pre approved, had been agreed with credit agencies that they would not affect your credit rating for applications made up until 31st October 2020.
Due to the new National Lockdown in November, the application period for payment holidays has been extended. Borrowers who have not yet had a mortgage holiday can request from their lender a pause in repayments that can last for up to six months. Those who have had their payments deferred already, can extend their mortgage holiday until they reach the sixth month limit on 2nd May 2021. After this deadline the Financial Conduct Authority has proposed that after this deadline further help should be available for customers struggling to pay their mortgage due to the effects of coronavirus as ‘tailored support’ specific to the borrower, rather than a one size fits all payment holiday as was seen during the National Lockdown. However, it’s worth knowing that any payment break or further help agreed from this date would be reflected in your credit report. Missed payments will negatively affect your credit score, and prospective lenders will be able to see the help you've recived for some time to come.
The general guidelines around receiving a mortgage payment holiday is that you are eligible if you cannot afford or will struggle to make repayments due to the impact of the coronavirus. They may offer an initial 3-month payment break, with a possible extension in case we find the situation unimproved in the near future. The steps to take if you want to understand if you can get a 3-month payment deferment is to contact your bank directly. Most major banks have now released a dedicated corona page or FAQ section on their websites. If you cannot find this on the website of your bank, we recommend that you contact their general customer help line. With the current high volume of questions around the coronavirus, you can expect long waiting times.
Tip: If you want to save money on your mortgage payments moving forward, you may be able to get a better deal by switching provider. Our partner Dashly compares mortgages and helps you switch if there is a better deal available. Find out more by visiting their website.
Struggling to pay rent
For those of us who don’t own a property but pay rent to their landlords, you might find yourself in a similar position where you cannot afford the monthly or weekly rent payments. There isn’t yet any clear announcement by the UK government on protection for UK renters, but the Chancellor has hinted that we will hear an update about this in the near future.
If you are struggling with the rent payments, urgently speak to your landlord. It will be a hard conversation as your landlord may be relying on his/her income from the rent as much as you are. It’s best to explain your situation and see if your landlord might be able to offer your more time to pay the rent. Trying to come to a reasonable and mutually satisfactory decision, will help both you and your landlord in these challenging circumstances. Good and prompt communication is key, so pick up the phone today if you are struggling to pay rent.
For commercial businesses the government has already announced action in the shape of a Corona Bill. According to the Chancellor Rishi Sunap MP, this includes “taking steps to change the law so that no company can be forced out of its premises due to loss of income”. For more information about the Corona Bill, visit gov.uk.
Credit card payments due
If you have a credit card payment that is due shortly, but you foresee that you won’t be able to pay it at that point in time, you should contact your credit card provider immediately. You can find the phone number or email address of the provider’s helpline on their websites.
In addition to the stress around meeting credit card payment deadlines, most banks and card providers have not confirmed that they will offer emergency credit limit increases. Some will offer repayment holidays on outstanding credit and a few will even waive missed payment fees. Contact your provider for details.
Struggling to meet loan or overdraft repayments
Similar to any type of regular payment or bill, a big part of society might find themselves currently in a difficult financial situation and unable to meet loan repayments or overdraft settling. As part of your emergency budget, you should list all regular repayments and direct debits. Mark which ones are loan repayments and check if you’re able to meet payment dates and amounts swiftly.
No matter which lender provided you with your loan or overdraft, we encourage you to talk to them directly if you cannot afford the repayments. Most loan providers will be able to talk to you directly and will do everything possible to help find a mutually convenient, temporary solution. You can find their contact details on their website.
Payment holidays on frequent bills
Besides the bills mentioned above, there might be other frequent payments that you don’t manage to pay due to the financial situation the coronavirus has put you in. For example, your energy bills might be higher due to you and your family being at home more, your council tax still gets taken out of your current account monthly and water bills continue to come in.
Council tax help
Many councils are offering to help residents who cannot afford to pay their council tax. This is currently done on a council-by-council basis, which means that you need to get in touch with your local authority to understand what rules apply locally. Ask the council if they offer council tax holidays - where they defer your payments for a few months - and you can pay them when you’re in a better position hopefully later this year. Your council might also be in a position to offer a significant decrease in what you need to pay if you’re struggling financially.
Water bills and self-isolation action
We have already seen many updates and emails from UK based water suppliers around the measures they offer if their customers lost their jobs due to the corona pandemic. They are proactive in ensuring that their customers who have seen their income drop due to the coronavirus know they can reach out to them for help. Furthermore, all water firms are pausing debt collection visits. You may still get a call, but they won’t be sending anyone round or applying for any new court orders during the current crisis.
Many water suppliers have asked to take action if you’ve been affected by the coronavirus and are in the so-called high-risk group. If you are classed as vulnerable due to the pandemic, for example elderly people or those with serious pre existing conditions, you need to go on the water suppliers’ websites or talk to them directly to class yourself as requiring Priority Service in case of disruption. The water company will then prioritise getting water to you in case of a disruption to your supply, for example a burst pipe. This is crucial if you’re self-distancing or self-isolating due to the coronavirus and are unable to go to a different location in case your water supply would be cut due to technical reasons.
Energy provider payment holidays
Some energy providers are offering customers who use a top-up card to pay for their energy, to purchase such cards online and receive them in the mail. Other providers have urged their direct-debit customers to contact them to alter their payment plan, stop payments temporarily or look for an alternative solution in case they have been affected by the virus.
Tip: Find out if you're paying too much on your energy bills and see if you could switch provider to save cash by entering your postcode our energy switching page.
Cancelling non-essential contracts
Aside from services you cannot live without, such as water, energy and the place you call home, there are some non-essential services that you could consider stopping or temporarily pausing.
Examples of such non-essential contracts are:
- Your gym membership or contract at a yoga studio. If your gym or health centres have to close their doors due to a national lockdown or positive coronavirus case, it might make sense to pause your membership and save some money. There are many free videos on YouTube that can substitute your daily or weekly workout routine.
- Entertainment services like Netflix or Amazon Prime. You might find yourself at home more and feeling the need to watch more Netflix than before to not get bored. Instead try playing board games, dig out your old DVDs or access some of the free content that Amazon and other streaming services have released in light of the coronavirus pandemic.
- TV sports packages - many major sporting events and leagues have been cancelled or postponed. The biggest broadband and TV providers haven’t yet offered to refund for the sports packages you might be paying for. This is however the ideal time to call up your provider and haggle your monthly subscription fees down.
Inez came on board in the Summer of 2019. Her main focus has been helping as many people as possible find our website through online marketing, writing content and partnership deals. She boasts 6 years of FinTech experience with other brands and has an in-depth knowledge of our customers.