What help is offered for household finances? – Forbes Advisor UK
If your financial situation has been affected by the coronavirus – or if you think it might be starting to be – here is a roundup of the help you could ask for.
Help with mortgages
If you haven’t already taken a mortgage payment holiday, you can request one from your lender until March 31, 2021, according to the directives of the regulator, the Financial Conduct Authority (FCA).
Payment holidays – also known as payment freezes or payment deferrals – are usually issued in three-month increments.
However, you don’t need to take that long if you find that you can make the payments after all. You can also choose to make partial payments on your mortgage, rather than paying nothing, to minimize the build-up of unpaid debt.
If you’re already on three-month mortgage repayment leave and now think you need to extend it, you can ask your lender for a further three-month period, bringing your total payment break to a maximum of six months. .
(If you took less than three months with a previous mortgage payment holiday, you can ask for longer this time to “top up” for up to six months.)
If you are not currently on mortgage repayment leave, but have already taken advantage of it, you will also be able to request additional leave, always up to a maximum of six months.
Since all mortgage payment holidays must end at the latest July 31, 2021.
If you have already had six months of mortgage payment interruptions, you will not be eligible for another deferral. In this case, you should contact your lender to discuss more personalized support.
Keep in mind that here, although the first six months of deferred payments will not be recorded as “missed payments” on your credit report (although this can still affect your future borrowing capacity). ), more personalized help can negatively impact your credit report.
As interest will continue to accrue on any mortgage payments you have missed, payment interruptions should only be taken as a last resort.
You can find more details, including how to request a mortgage payment holiday, on the site FCA website.
Mortgage lenders are not able to impose foreclosures before April 1, 2021 (except in exceptional cases).
Help with credit card and store payments
If you have debts on a credit card or bank card – and you are unable to make the minimum payments – you can request a three-month payment holiday from the supplier until March 31, 2021, if you don’t already have one.
If you are already on payment leave or have already had one, you will be able to “top up” for up to six months.
Any assistance beyond six months will be defined as “tailor-made support” which could take the form of reduced payments, waiver or reduction in interest, or acceptance of a new loan plan. refund.
Again, it’s important to only take time off from paying for your plastic if you really need it. This is because interest – which can be around 18% of the APR for credit cards and much higher for bank cards – will continue to accumulate during payment freezes, costing you more in the long run. .
Help with personal loans and other consumer loans
Besides credit and store cards, the same rules apply to other Consumer credit, too much.
This includes personal loans, catalog credit, auto finance (including hire-purchase and leasing), lease-to-buy, buy-it-now, pay-back, and pawn shop agreements.
All payment holidays must end by July 31.
Help for overdrafts
If you rely on your overdraft for your expenses, things can get expensive quickly. Since the overdrafts were reviewed by the FCA in April 2020, many large banks are now charging interest of around 40% APR.
If you are having difficulty with your overdraft as a direct result of the coronavirus, contact your bank. It may agree on one or more of the following:
- reduce or waive interest
- a phased reduction plan for your overdraft limit and your balance
- transfer the debt overdraft to an alternative credit product on more favorable terms.
FCA advises you to be as “open and honest as possible” about your situation when speaking to your bank, as this will help them provide a solution that best meets your needs.
Help with payday loans and other expensive short-term loans
You will be able to request a one-month payment holiday on any high-cost short-term credit agreement until March, 31st if you are “newly affected” by the coronavirus, according to FCA rules. The lender will not be allowed to charge interest during this period and the leave cannot be extended.
If you’ve ever had a payment holiday, you’ll need to contact your lender for more personalized support. Find out how it works on the FCA website.
Help with household bills
Housing tax : if you are having difficulty paying your council tax due to the coronavirus, or if you are now receiving benefits due to a drop in income, contact your local authority as you may benefit from an interruption or reduction of payment.
However, don’t expect a benchmark answer – each board has its own policy which, in turn, will depend on your particular situation.
Utilities: if you are struggling to pay household bills such as energy, water, and broadband due to the coronavirus, your provider should offer forbearance such as payment interruptions or payment flexibility.
Respective industry regulators have also ordered companies not to cut off energy, water and even broadband supplies if customers are struggling to pay due to the coronavirus.
Insurance payment assistance
The official three-month payment deferrals on “general protection” insurance (such as auto, home, travel, life and health) ended on October 31, 2020.
However, you can always ask for more personalized help from your insurer, which could include a reduction in the level of coverage to reduce premiums or a short-term reduction in monthly payments.
This more personalized support will, however, be reflected on your credit report.
Insurers have also made a commitment to their clients to help them get through the coronavirus pandemic, and these will continue until at least March 19, 2021. For more information, consult the Association of British Insurers’ coronavirus center.
Help for tenants
If you are unable to pay your rent and you cannot come to an agreement with your landlord, check to see if you are entitled to Universal Credit – whose housing allowance part was increased by the government last spring to support tenants during the pandemic.
If you still can’t pay your rent, your landlord could evict you. But the rule changes triggered by the coronavirus have made this process much longer.
Homeowners in England, Wales and Scotland will need to provide six months notice, while in Northern Ireland it is 12 weeks.
The ban on deportations in England was extended until May 31st and up to June 30th in Wales, and March, 31st in Scotland.
Citizens Advice estimates that around half a million private tenants in the UK are currently behind on their rent, with one in four having been threatened with eviction or contract cancellation by their landlord.
The average amount owed in rent was £ 730, he said.
Chancellor Rishi Sunak announced a new tranche of grants, intended primarily for the retail, hospitality and leisure sectors.
If you get into debt…
The Government’s Insolvency Department also formulate proposals to broaden the eligibility criteria required to enter into a Debt Relief Order (DRO) – which allows some people with lighter debts to have them written off within 12 months.
If you’re worried about getting into debt, contact a free debt counseling charity such as Stage change for personalized support.
If you are in debt or looking for debt advice, always stay alert and beware of scams.