Coronavirus has impacted people’s lives in the UK like never before. And it has brought a lot of financial uncertainty to many households. Across the country, people have seen their incomes drop as a result of the pandemic, which in turn has brought about its own special set of money worries. It is a troubling time, but there are resources available. We’re here to help guide you through all your coronavirus money-related FAQs. (To keep up to date with more coronavirus-related FAQs, take a look at our coronavirus resources page.)
The good news is that disconnections have been completely suspended. So you won’t find yourself without energy.
But if you are concerned that you will be unable to pay your bill on time, contact your energy supplier. According to Ofgem, your options include:
If you have a prepayment meter and are self-isolating, your energy supplier can add credit direct to your meter. Other options include your supplier posting credit-loaded cards to your address. Or you can nominate someone to top up for you.
The Financial Conduct Authority (FCA) is encouraging lenders to provide mortgage holidays to those who need them. The guidelines at the moment are that you can apply for a three-month payment holiday.
If you are granted a payment holiday, you won’t need to pay your mortgage for three months, but the amount you owe will still incur interest. You will have to make up the missed payments after your payment holiday ends.
For more on this, check out our article on mortgage payment holidays because of coronavirus.
One coronavirus money-related FAQ is ‘What help is available to renters?’ Well, if you are struggling to pay your rent, government advice is to talk to your landlord straight away to see whether you can work out a rent payment scheme.
Buy-to-let landlords are eligible for mortgage payment holidays. The idea is that they pass this saving on to their tenants.
Meanwhile, housing repossessions have also been suspended and notice periods provided by landlords have been extended.
For more information, check out our article: What does coronavirus mean for rent payments?.
Similar to its advice on mortgages, the FCA has said that all credit card holders can ask their provider for a minimum three-month payment freeze on card repayments. You will either pay nothing during the three months or an agreed nominal sum.
The important thing to be aware of is that your debt will still incur interest during this time. Providers are being encouraged to charge a ‘reasonable’ rate of interest, but this will still build up. And with compounded interest, you could quite easily find that the amount you owe quickly spirals. So try to only take a payment holiday if you really need one.
Another coronavirus money-related FAQ is about what you should do if you can’t keep up with your loan repayments. Once again, the FCA guidance is that you can apply for a payment holiday of three months. The cost of your loan will be deferred for the agreed period. Then, after your payment holiday, most likely either your monthly payment or the length of your loan term will increase.
If you have a payday loan, a one-month payment freeze can be applied.
And if you are concerned about a car loan, the same three-month payment break is available. Finance companies will not be able to repossess your vehicle during this time.
If you already have an overdraft facility on your current account and have been affected by coronavirus, your bank must offer you the first £500 interest-free. If you don’t have an overdraft, you should be able to request one if you are struggling.
You may also be aware that the FCA has ruled that, from 6 April 2020, current account providers must only charge a single annual rate of 40% interest, on both arranged and unarranged overdrafts, with no additional daily charges. As a result of the coronavirus pandemic, the FCA has since said that nobody paying the 40% rate should be worse off than before the new legislation was introduced, for the three months from 6 April 2020.
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