As we collectively battle through what is an unprecedented public health crisis it is clear that many people are going to be adversely affected when it comes to their day to day finances. The government has announced several help packages for certain groups but what people want to know is what help is out there right now.
The Bank of England has acted quickly to reduce the interest rate to 0.1% which means cheaper mortgages and loans. How this works depends on what type of mortgage you have.
Tracker Mortgage: you will benefit from the full base rate cut which equals around £40 a month on a £100,000 mortgage.
Variable Rate Mortgage: this should also benefit from the full base rate cut but may vary from lender to lender.
Fixed Rate Mortgage: your rate will not change at all.
Mortgage payment holidays are available if you are struggling with your bills. This means that your bank may offer you a 3-month payment-free period however the standard payment plus the interest you would normally be charged is added to the mortgage when your normal payments resume after 3 months. Apply for this online wherever possible as phone lines will be extremely busy due to staff self-isolating or working from home.
Please note that you must agree a payment holiday with your lender as these are not automatic.
The Housing element of Universal Credit will cover mortgage interest in some cases. See here https://www.gov.uk/apply-universal-credit for advice.
Some lenders are offering payment holidays or reduced payments and in some cases will waive fees for missed payments. It’s worth checking with your loan provider to ask whether they can help you but don’t just stop payments.
If You’re Renting
You may be eligible for help with your rent through the Universal Credit system following the government’s announcement of an increase in UC and housing benefit to cover at least 30% of rents in your area. Contact the DWP for advice. Landlords are forbidden from starting new eviction proceedings for the next 3 months.
Speak to your provider to ask about a repayment holiday and about whether they will allow any missed payments to not incur fees. Some banks and card lenders are allowing credit limit increases on an emergency basis but think carefully about how you could afford increased monthly payments in the future.
Act fast to move savings to accounts with a better interest rate before any rate cuts take effect. If you have savings in fixed term accounts some banks are allowing customers to access these early without penalty. These include:
- Bank of Scotland
- First Direct
Help for Workers
The government has pledged to cover 80% of salary (up to £2500 a month) for employees whose jobs can be kept open.
Statutory Sick Pay of £94.25 a week is available to those who have been officially told to self-isolate.
Self-employed people may also be eligible for the 80% support package and can also apply for Employment Support Allowance or Universal Credit. Self-assessment tax payments normally due in July can be delayed until January 2021.