Many homeowners are worried about how the coronavirus crisis will impact their ability to pay their bills. Get advice if you are worried about paying your mortgage or rates.
Paying your mortgage
Keep paying your mortgage if you can afford to, especially if you have a repayment arrangement with your lender or have been to court about repossession.
Support from your lender
Talk to your lender if you are struggling to pay your mortgage because of coronavirus. Your lender should offer you support if
- you are struggling to pay your mortgage because of COVID-19, or
- your mortgage holiday has ended, but you are still having financial problems.
The lender has to consider your circumstances when deciding what support to offer. This is called "tailored support". There are different options the lender can consider. Some of these are set out below.
A payment holiday or payment deferral
This may be offered as a short-term solution. It might be offered if your situation is not stable and you cannot yet commit to longer-term solutions.
Your lender may allow you to make reduced payments if you cannot afford your usual payment. This will be a short-term measure.
Extending the term of your mortgage
Your lender can agree to make the term of your mortgage longer. While you will pay less each month, you'll pay more overall as you are paying interest for a longer time. It is basically a remortgage.
Changing your mortgage type
Your lender may agree to change your mortgage type if this helps you to manage your repayments. This could allow you to change to a lower interest rate.
Your credit report
Lenders will tell credit reference agencies about any tailored support you get. Your lender should let you know if the support they offer will have an impact on your credit rating.
Asking your lender for extra "tailored" support
How you apply for tailored support depends on whether you're getting a mortgage holiday.
Already getting a payment holiday
Your lender should contact you before the mortgage holiday ends. They will need to find out if you can afford to make resume your normal payments. If you can't, they should discuss options for tailored support with you.
Not on a payment holiday
Check your mortgage lender's website for a section about supporting customers during COVID-19.
Contact the lender as soon as possible to let them know you need support. It's best to do this before you miss a payment. When you talk to your lender make sure you understand all the options. Ask how these options will impact on your future payments and your credit rating.
Can your mortgage lender take you to court?
Lenders should only take legal action against a mortgage holder as a last resort. This should only happen if all other attempts to resolve the payment problems failed. The lender might take you to court if
- you cannot agree a payment plan or
- you break the terms of a payment plan.
It's important to get advice if your lender is starting legal action against you. You could lose your home if you ignore this problem.
The courts adjourned all existing repossession cases last year. Lenders can now contact the judge who deals with these cases, (the Chancery Master), to ask:
- for permission to resume a case that had been adjourned, or
- for permission to begin a new legal case against a mortgage holder.
If your lender does this you should get notice at least 6 weeks before the Master considers your case. You should receive a letter saying your case is listed for an administrative review. Contact Housing Rights urgently if you get a letter from the court. We can explain what information you need to give the Master to help your case.
Enforcement and eviction
The FCA told lenders not to enforce any possession orders during the pandemic. Enforcing an order is the last step in repossession. At this stage the borrower must leave the property.
Since 1 April 2021 the FCA has allowed lenders to start enforcing orders. But, this should only happen as a last resort and if it is appropriate to do so. Lenders need to consider whether any person in the property is particularly vulnerable due to COVID-19.
Get advice now if your lender has already got a possession order for your property.
Benefits to help with mortgage payments
If you are already claiming certain benefits, you may be able to get Support for Mortgage Interest. This is a payment that government makes to help you with the interest charge on your mortgage. It isn’t a benefit. Instead, it is a loan and you will have to pay it back when you sell your home.
If you have just started claiming Universal Credit, you need to wait 9 months before you can get this help with your mortgage.
The government hasn’t announced any changes to benefits that will give extra help to pay mortgages.
Benefits to help with rates
You can apply for a rates rebate if you are getting Universal Credit. Your payment can be backdated for three months or until you became entitled to Universal Credit if you've been getting the benefit for less than three months.
Buying or selling a home
The Department for Communities has published guidance to support the reopening of the property market. If you are selling your home or trying to find a home to buy, you should read this guidance, It explains the steps that sellers, buyers and their agents should take to minimise the spread of the virus and ensure that the moving process happens as safely as possible.
Make sure you check the Public Health Agency website for up to date information and advice on the virus and what to do if you think you may have it.
Read the advice on how to keep your distance from others if you have any symptoms or think you may have the virus. Remember to stay at least 2 metres (3 steps) away from other people and to wash your hands thoroughly and regularly.