Now is a lot of uncertainty around – but if you’re worried about your own financial situation, there are lots of things you can do. Here put together an FAQ of quick, easy advice for people worried about their financial arrangements.
Credit score
How will the current situation affect my credit score?
People’s scores will rise and fall as they keep – or stop – paying their debts. This means that if you lose work, as many people currently are, your score may fall as you struggle to make your repayments. If you don’t make repayments for any reason, including losing work due to coronavirus disruption, your credit score may fall.
This is not an ideal situation, but while there isn’t a perfect solution at present, there are simple things you can do to help:
- Always try to make at least your minimum monthly repayments
- Avoid taking out any further lines of credit if you can
- Many loan and credit card providers are offering payment holidays and reduced payments for the length of the crisis – so get it touch with yours to see what it’s offering
Mortgages
What is a mortgage holiday?
The government recently allowed mortgage holders to apply for a payment holiday of up to three months if they’re struggling to make their payments during the crisis.
How this works in practice differs between lenders, but it’s important to note that this isn’t free money: you’ll still have to pay the full sum in the fullness of time. You just won’t be penalised for failing to make payments in the short term.
How do I apply for a mortgage holiday?
Contact your lender as soon as possible. Each lender has its own way of doing things, so it will be able to fill you in on all the details. Applying won’t affect your credit rating.
Who can apply for a mortgage holiday?
Anyone who holds a mortgage is currently allowed to apply for a mortgage holiday, though it’s not legally guaranteed they’ll actually get one.
Do I need to prove I have been negatively impacted by CV-19?
Major lenders are offering three-month payment holidays to those struggling as a direct result of coronavirus. Many are offering fast-track approval, so you may not be asked to provide evidence of your situation or undergo means testing – but it’s best practice not to take advantage of the current holiday unless you need it.
Related: Spring clean your finances | MoneySuperMarket
When will I have to repay deferred payments?
This depends on your lender’s specific policy. There shouldn’t be any fees or penalty charges, but you will still need to pay the interest accrued once the holiday is over.
Lenders is most likely to do one of the following:
- Spread the cost of the shortfall across the remaining term of your mortgage (this will result in largely monthly payments once things are back to normal)
- Increase the length of your mortgage term, which should keep payments the same
Will a mortgage holiday affect my credit score?
Provided you’re able to meet your repayment obligations once the holiday comes to an end, the agreed mortgage holiday will not affect your credit score.
Credit Cards
Does the recent base rate change impact my interest rate?
Most credit cards are not affected by the recent change in the Bank of England base rate, which fell from 0.25% to 0.1% in March. The interest on credit cards is almost always much higher than the base rate.
How can I get a credit card holiday for my credit card?
Contact your credit card provider to find out. Many are allowing emergency credit limit increases, waiving fees for missed payments – and a handful are offering payment holidays.
Will a payment holiday impact my credit score?
No prior-agreed payment holiday with your credit card provider should negatively impact your credit score.
How is interest applied to my holiday payment?
This will be decided by your provider.
Can I arrange a temporary credit increase?
Many credit card providers are offering to increase limits to customers who ask, but it’ll depend on the provider and on your own circumstances – for example, whether you’ve been a reliable payer in the past.
Is it worth getting a 0% balance transfer credit card?
If you have a few outstanding debts and you’re worried about repaying them, it could be a good idea to apply for a 0% balance transfer credit card. For a small fee, you can consolidate your existing debts onto a card like this and get a year or more of interest-free borrowing. It’s possible that lenders may begin to tighten eligibility criteria, so don’t delay for too long if this is your plan.
Loans
How does the base rate change affect loan payments?
Personal loans tend to come with a pre-agreed interest rate, so the chances are that the recent base rate cut from 0.25% to 0.1% won’t make any difference to you.
Can I get a loan repayment holiday?
Many lenders are offering payment holidays on loans, but the only way to find out if you’re eligible is to find out from the provider.
Related: Make The Most Of Your ISA Allowance | MoneySuperMarket
Some might allow you to defer payments for a few months, while others are waiving late payment fees or reducing payment obligations.
Can I get a holiday on my car finance loan?
This depends on the lender as there’s been nothing specific from the government on this kind of loan. It won’t hurt to ask.
Current accounts
What’s going on with the new overdraft charges?
Almost every bank and current account provider is moving to 40% interest on authorised overdraft facilities from April 6. This is unlikely to change now, even given the circumstances, and it’s obviously a huge amount to pay, so your priority should be to get out of your overdraft.
Some banks are offering an emergency buffer for people who’ll be affected by the crisis, but you should get in touch with your bank sooner rather than later to find out exactly what’s on offer.
Savings accounts
How does the base rate change affect my savings?
As ever, this answer varies from bank to bank, but as a rule of thumb if you have a savings account with a variable rate of interest, that rate will decrease – if it hasn’t already.
If you want to beat the base-rate change, your best bet is to find a fixed-rate savings account that hasn’t yet reduced its interest. Fixed-rate accounts lock your money away for a set period of time, in exchange for a set rate.
Let’s face it though, there aren’t many savings accounts currently offering outstanding rates of interest at present.
If you want to get at your savings but they are locked in a fixed rate savings account, many providers are currently waiving the early access penalty to help out during coronavirus. But bear in mind, you may not get as good a rate elsewhere.
Insurance
What’s happening with travel insurance?
The coronavirus crisis holds huge ramifications for the travel industry. It’s very difficult to travel internationally at all at present, but MoneySuperMarket has prepared a comprehensive page of coronavirus advice for travellers.
How is coronavirus affecting car insurance?
Telematics insurance is being partially affected by coronavirus. Restrictions on travel mean engineers aren’t able to come out and fit new black boxes.
The government is however allowing people to defer scheduled MOTs for six months; provided your car is legally roadworthy, you will be allowed to postpone your test until at least September.
Can I get wedding insurance?
Wedding insurance has been completely suspended for the time being.
Can I get unemployment insurance?
Unemployment cover is not currently being offered.
Is business insurance still available?
Business interruption cover is not available at present.
Housing
Can my landlord evict me if I can’t pay rent?
The government recently confirmed that landlords in England and Wales will need to give at least three months’ notice before starting eviction proceedings – even if you have not been managing to pay your rent.
After that they will be required to work with you to draw up a payment plan. So, it’s very difficult for landlords to evict at the moment.
It’s illegal for landlords to make you leave without notice or a court order, or to lock you out of your home.
The council and the courts can help you if your landlord stops you from getting into your home.
Can landlords evict lodgers?
They can, but they still need to follow the rules, which means they have to give you reasonable notice – and adhere to any contract you have in place.
I’ve had notice from my landlord. What do I do now?
Stay in your home.
Current circumstances mean that tenants who get notice between March and September 2020 are entitled to three months’ notice before their landlords can ask the courts to evict them.
The housing charity Shelter has more information on renting and coronavirus here.
Energy bills
I top up my gas and electric in person. How do I pay another way?
The government has agreed emergency measures with the energy suppliers so prepayment customers in isolation can still top up during the pandemic. Measures include:
- Posting cards loaded with credit
- Adding credit direct to your meter
- Letting you nominate a trusted person to top up for you
Regulator, Ofgem, has ordered suppliers to “take proactive measures to support prepayment meter customers, including customers in vulnerable circumstances”.
If you can afford it, it might be wise to top up extra next time, to try and build up a buffer should the worst happen.
What can I do if I fall into arrears on my standard energy and water bills?
Disconnections have been completely suspended, so you won’t lose access to your energy. If you fall into difficulties, get in touch with your supplier. Most energy firms are offering some of the following measures for people struggling to pay:
- Bill delays
- Waived late payment fees
- Spreading repayment out
- Alternative payment methods