As deadline for coronavirus support packages runs out, you can still get help – here’s what you need to know
Heavy weight: The latest round of support is leaner, more complex and has more pitfalls
As new lockdowns are triggered across the country, millions of households have been left with reduced income and are struggling with finances.
But unlike the lockdown in spring, when millions of borrowers were able to temporarily suspend their mortgage payments, financial forbearance is now harder to come by.
The latest round of support, replacing the old schemes from today, is leaner, more complex and has more pitfalls. Here is what hard-pressed households can do now.
Contact your mortgage lender
The deadline to apply for a mortgage payment holiday passed this weekend. This was a lifeline to the 2.5million households that took one since the start of the pandemic. Some that applied before the deadline will still have a payment freeze of up to three months.
The help now available is less generous. Contact your lender to work out a repayment plan that suits your circumstances. It may pause payments for a limited period, or cut monthly payments, for example by extending the repayment term.
Be aware that any payment freeze will mean higher payments down the line to make up the difference.
REMEMBER: From today, mortgage providers can once again try to legally repossess your home. But they shouldn’t start proceedings if: you live in an area with a local lockdown; you would have to break social distancing guidelines to move out; someone in your household is self-isolating; or if your only arrears are deferred payments you’d agreed to repay.
Request more time to pay rent
Your landlord may agree to give you more time to pay. You may also be eligible for housing benefit if you are having difficulties meeting payments. The blanket ban on evictions is now over, but landlords are still not able to start possession proceedings unless they have given tenants six months’ notice, except in the most serious cases.
REMEMBER: There is an £180million Government fund for discretionary housing payments for councils to distribute.
Ask to reduce or delay water bills
Financial support varies by water supplier and your circumstances. You may be able to reduce or postpone payments for up to three months. Watch out though, as subsequent bills may rise. If you are struggling with debt, a supplier may match any money you pay towards a bill pound for pound.
REMEMBER: Some households with water meters are also eligible for the WaterSure scheme. This allows bills to be capped. To be eligible, someone in your household must be in receipt of certain welfare benefits and be responsible for three or more children under 19 living in the property – or have someone with a medical condition requiring significant extra water.
Get a better broadband deal
Staying connected is more important than ever – especially with so many people working remotely – and phone providers are obliged to help if you are struggling to pay a bill. They may offer a cheaper tariff, a payment plan to pay off bills over a longer time, or a delay in payments.
Do shop around. If you have come to the end of a deal, you may be able find a cheaper one elsewhere. Use a comparison website or haggle with your current provider.
REMEMBER: If you are on a low income, you may be able to benefit from a cheap deal from BT. Its BT Basic tariff costs £5.16 a month and you will never pay more than £10 a month for calls.
If you want to add broadband to the package, the cost is £10.07. Go to bt.com/basic to find out more.
Try to switch to a cheaper loan
Get in touch with your provider before you miss a payment. They are required to come up with a solution tailored to you.
This could include anything from suspending payments; cancelling further interest or charges; allowing you to make no or reduced payments; or agreeing a repay ment plan. As of yesterday, banks will no longer be required to offer free overdrafts up to £500. This means overdrafts will attract the banks’ usual charges with interest of 40 per cent or more.
Sarah Coles, personal finance analyst at wealth manager Hargreaves Lansdown, says: ‘If you were using a free overdraft, try to switch to a cheaper form of borrowing, and make a plan to pay it off as quickly as possible.’
REMEMBER: Forbearance may also be available if you are struggling with motor finance, rent-to-own, buy-now-pay-later or payday loans.
Seek a deferral on insurance payments
Insurers should grant you a payment deferral if you need one – and you should not be charged for it.
REMEMBER: Your home insurance cover will not be affected if you are working from home. Similarly, your car insurance premiums will not rise if you have to drive to work when you previously would have taken public transport.
Look for a council tax discount
Help varies between councils, so contact yours to find out what they are willing to provide. You may get a council tax discount if you are on a low income or claim certain welfare benefits.
REMEMBER: You may also get money off a bill through a £500million hardship fund provided by the Government for council tax relief.
WHERE TO GO FOR ADVICE ON DEBT
Nearly a third of adults have seen their household incomes fall since February, according to the Financial Conduct Authority.
If you are struggling with bills, it’s far better to arrange a payment plan than miss a payment.
Jane Goodland, corporate affairs director at wealth manager Quilter, says: ‘It is critical to get a firm grasp of all your outgoings, enabling you to get a clear picture of your financial situation and then figure out how best to meet loan repayments, and which obligations to prioritise.’ Debt advice charities Citizens Advice, StepChange and National Debtline can all help with this process.
From today, any new payment freezes or reductions will be recorded on your credit score and could affect your longer-term borrowing prospects. James Jones, of credit reference agency Experian, says such support would result in a lender registering an ‘arrangement flag’ on your credit report.
He adds that this would be visible on a credit report for a few years, but would not normally be a factor in credit scoring.
However, these flags are routinely reviewed by lenders when deciding whether to offer further credit.