Coronavirus - Consumer guide | moneyfacts.co.uk

nigel woollsey

Nigel Woollsey

Online Writer
Published: 31/03/2020

Coronavirus information

Please note: Current information and Government advice is changing quickly in the face of the Coronavirus pandemic. All info below is correct as of 31 March 2020 but we'll be updating this guide on a regular basis to keep up with the latest developments. However, all financial institutions and the UK Government will post the most up to date info on their own websites.

The Government has agreed with banks that they will provide ‘forbearance’ to any mortgage borrowers who are struggling due to the Corvid-19 outbreak. Many banks have announced that they would allow mortgage borrowers repayment holidays of up to three months to help ease the financial pressure caused by the Covid-19 outbreak. However, some smaller building societies might not have the facilities available to enable mortgage payment holidays. This could change as time goes by and lenders start to put new processes in place. Those who may not be able to offer a holiday immediately should have alternative ways to help you with your mortgage payments.

How do mortgage payment holidays work?

A mortgage payment holiday can help you if you are experiencing short-term and temporary difficulties in making your mortgage payments because of the Coronavirus pandemic. During the holiday period, you will not need to make your usual mortgage payment. However, it should be noted that you will still accrue interest on your mortgage balance and will need to catch up on the missed payments. This means that your monthly repayments could be higher when the payment holiday finishes, and you resume paying your mortgage.

To be eligible for a mortgage payment holiday, you will need to be up to date with your mortgage payments.

Find out more about mortgage payment holidays.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Do not cancel your direct debit, the lender will make sure they do not take the payments from you for the agreed holiday period.

Cancelling your direct debit could result in it being recorded as a missed payment, which will adversely affect your credit file.

Will a mortgage payment holiday affect my credit score?

Lenders have been told that any payment holidays provided due to the Coronavirus pandemic should not have a negative impact on your credit file.

Worried? Get professional advice

If in doubt, borrowers should speak to a qualified financial adviser about their mortgage options.

How to apply for a mortgage payment holiday

Anyone who is concerned about paying their mortgage or any other form of borrowing should contact their lender as soon as possible to discuss their options.

The banks and larger lenders now have online forms for you to complete and make your claim for a mortgage payment holiday. They are also are waiving the standard practice of assessing the customer’s finances and considering what forbearance options may be the most suitable to help make the process as straightforward as possible during this stressful time.

Self-certification for help paying your mortgage

Most banks and building societies are allowing people to ‘self-certify’ when it comes to applying for a Coronavirus mortgage holiday. Basically, this means that that they will not ask you for documentary proof that you are struggling with finances due to the Coronavirus.

In addition, if you or someone else in your household is suffering from the Coronavirus, you will not have to provide a doctor’s certificate or any other form of medical proof.

Summary of key lenders approach to mortgage payment holidays

Provider

Offering coronavirus payment holidays?

Online application?

Documentary evidence needed?

Decision in…

Barclays

Yes

Yes

No

Three to five working days

HSBC

Yes

Yes

No

Within 7 days

NatWest

Yes

Yes

No

Within five days

Royal Bank of Scotland (RBS)

No

No

N/A

No information about mortgage holidays on its Coronavirus page

TSB

Yes

Yes

Bank wants access to your medical records for Covid-19

Does not say

Lloyds

Yes

Yes

No

Three to five working days

Halifax

 Yes

Yes No

Three to five working days

Landlords can now apply for a buy-to-let mortgage payment holiday

How else can lenders help you with your mortgage payments?

For homeowners who are unable to take a mortgage payment holiday or for who it might not be the most suitable approach, there are several other options available:

  • Making lower repayment amounts.
  • Lengthen the mortgage term.
  • Temporarily switch to an interest-only mortgage.

Making lower repayments or extending the period of the loan will mean that the borrower will be paying more in interest over the lifetime of the mortgage. You should also check with your lender the impact these choices will have on your credit file.

Homeowners must make sure they act before missing a mortgage payment and instead contact their mortgage lender early to discuss the options available.

For more information, see our guide: Worried about how you will repay your mortgage?

Protection for those renting

The Government has already started to introduce emergency legislation to protect renters during the Coronavirus outbreak.

This includes:

  • Suspending new evictions from social or private rented accommodation while this national emergency is taking place.
  • No new possession proceedings through applications to the court to start during the crisis.
  • Landlords will also be protected, as the option of an up to three-month mortgage payment holiday has been extended to buy-to Let-mortgages.

At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, considering tenants’ individual circumstances.

How is Covid-19 affecting saving rates?

The Bank of England has cut the base rate from 0.75% to just 0.10%. A low base rate carries the risk of potentially lower rates for savings accounts. Therefore, savers may wish to act quickly to secure the best savings rates and ISA rates available in the charts.

In addition, an increasing number of banks and building societies are allowing emergency access to fixed term accounts for those who need it.

Banking services

Information on how your banking habits might be affected by Covid-19

Access to bank branches

Employees in both banks and building societies are listed by the Government as key workers and so are not restrained by the current rules on remaining at home. Banks and building societies are endeavouring to keep branches open, but staff absences are making this increasingly difficult and some are only opening branches on specific days. You should check your bank or building society’s website or social media to check when and if your branch is open. Banks and building societies themselves are encouraging customers to use online and telephone banking systems wherever possible. If you are not set up for this, you should contact your bank or building society for help.

Managing payments by cheque

Many banking smartphone apps now allow you to deposit cheques – meaning you don’t even have to visit a branch or ATM to do this anymore. In the current crisis, several banks have raised the limit on banking cheques through a smartphone up to £500.

No fees for missed payments

Among other measures, Lloyds, Halifax, Bank of Scotland and Barclays will not be charging extra fees for missed payments on credit cards, loans and mortgages. Overdrafts will still function as normal, however, some banks are offering 0% overdrafts up to £300, so it’s a good idea to check online to see what your bank’s position is. From 6 April, banks will still be implementing changes to how overdrafts work – particularly in terms of fees and interest rates charged. For more on this, see our guides: New overdraft charges start to impact consumers and Revealed: the cost of new bank account overdraft charges.

ATMs, cash and contactless payments

Banks are encouraging customers to make as much use of contactless payments as possible. With contactless cards able to read if held close to the reader, this limits a consumer’s physical contact with tills and terminals when paying.

In order to encourage more people to use contactless payments, banks are increasing the limit for the value of things you can buy from £30 to £45 from 1 April. This might increase further as the pandemic continues.

In addition, using contactless payments wherever possible will also cut down on physically handling banknotes and coins, which might spread the virus. Less use of cash also means less use of ATMs, which will be hard to keep clean between users.

Credit cards

The Financial Conduct Authority (FCA) has announced that it is putting on hold the banks’ obligation to suspend the credit cards of individuals that are in persistent debt and have not responded to their lender’s communications. The regulator has taken this step so the most financially vulnerable are not left without access to credit during the Covid-19 outbreak.

The credit card persistent debt rules came into place in February 2020 and allowed banks to suspend credit cards held by customers who were in persistent debt for the last three years. While the rule will still stand, the FCA has stated that customers will have until 1 October 2020 to respond to their bank’s communications about their persistent credit card debt.

Loans

Several high street banks have announced that they will offer loan repayment holidays to help their customers struggling financially due to the impact of the Covid-19 outbreak. As such, consumers who believe that they will struggle to make loan repayments due to the pandemic should contact their bank as soon as possible to discuss potential options to ease the financial burden.

Alternatively, consumers can also contact Citizen Advice for information and advice on what to do if they find themselves struggling financially due to the outbreak.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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