The COVID-19 outbreak is already having an economic impact across the country and could be affecting people's ability to pay their mortgage, rent payments and other payments.
Government action
The government has set out that individuals who have difficulty paying a residential or buy-to-let mortgage due to coronavirus should be given a three-month payment holiday. These payments are deferred, and therefore added to the end of your mortgage term and interest will continue to accrue. You will pay more in the long term if you take this option unless you are able to overpay in future (being minded of any early repayment charges).
It is important that you are aware of your full financial situation and have a clear picture of your individual circumstances.
Work with your lender
Banks and building societies are poised to work with customers to help them through these difficult times. If you do not qualify for a mortgage holiday (if you are already in arrears on your mortgage - per government advice as at 19 March 2020) there may also be some other options.
Making longer-term changes to your mortgage, for example by extending the term, moving to a different rate or switching all or part of your mortgage to interest-only.
Reducing the amount you pay on your mortgage each month (this will extend your mortgage term and therefore increase the overall cost of your mortgage).
Some banks and building societies will allow customers to access fixed-rate savings accounts early without closure charges.
“Breathing space” can be given in relation to unsecured loans.
Credit card and overdraft limits can be temporarily increased, and some lenders may offer a payment holiday. Some lenders are also removing interest charges for a set period.
Some banks and building societies will allow customers to access fixed-rate savings accounts early without closure charges.
“Breathing space” can be given in relation to unsecured loans.
Credit card and overdraft limits can be temporarily increased, and some lenders may offer a payment holiday. Some lenders are also removing interest charges for a set period.
Each lender will have different methods of applying for any holiday or changes to existing repayments schedules. Many are now offering an online registration process to ease the burden on call centres.
With the current situation changing on a daily basis, banks are continuously reviewing their policies and may remove overdraft charges (for arranged overdrafts) and modify other charges. For example, Barclays has automatically removed customer overdrafts fees from 27 March to 30 April to support people in financial difficulty. Again, it’s worth checking your bank’s website on a regular basis. As with any financial difficulties, the earlier you speak to your lender, the more efficiently they can help. If it is getting close to your mortgage payment date and you are unable to make the payment speak to your lender as soon as possible.
For further guidance specific to your own circumstances, we recommend meeting with an accountant and also your IFA. For more information and advice, get in touch with Catherine today. Give her a call on 01423 431889 or email catherine@bctaccountants.co.uk.
The information above correct as at 26th March 2020