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.
If you can’t keep paying because you income has been affected by the coronavirus crisis, contact your lender to ask for a mortgage holiday. The government has announced that lenders will offer a mortgage holiday, allowing borrowers to stop payments for three months. This break in payments will not affect your credit history.
Every lender will have its own policies and eligibility criteria, but lenders should by sympathetic and helpful to people affected by a drop in income because of the coronavirus crisis.
Get advice if your lender has refused your request for a payment holiday.
How does a mortgage holiday work?
When you request a mortgage holiday, you get a break from paying your mortgage for a fixed period of time. The government has recommended three months as a suitable period.
Interest will still be added to your loan during this time and this interest will be added to your future payments. To collect the missed payments, your lender will either
- extend your mortgage term by the number of months you had as a holiday or
- slightly increase your monthly payments after the holiday for the remainder of the mortgage
Each lender has different policies and procedures in place for approving and managing mortgage holidays. Mortgage holidays taken as a result of coronavirus should not affect your credit rating, but make sure to confirm this with your lender
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.
Changes to domestic rates
The Department for Finance announced that rates bills would be issued three months later than normal. This is to help people who would struggle to pay the rates bill in April, May and June.
However, your annual rates amount will stay the same. This means that any person who pays their rates in installments will have a bigger monthly bill once the direct debits start up again.
Benefits to help with rates
You can apply for a rates rebate if you are getting Universal Credit. Because of the way the rates rebate system works, it may be better to wait until your rates bill is issued in June to apply. You can ask for your rates payment to be backdated for up to three months.
Talk to your employer
The government announced a wage guarantee scheme to protect the wages of people who are kept on payroll when businesses close. This scheme will cover 80% of your wage if you earn £2,500 or less each month. The details of this scheme aren’t available yet and payments probably won’t start until the end of April, but speak to your employer to see if they know more.
Can you claim benefits to help?
You may be able to get benefits to help with your living costs if your income has reduced.
People may be able to claim the following benefits
- statutory sick pay
- new-style Employment and Support Allowance
- Universal Credit.
Speak to advisers at Make the Call to find out which benefits you can apply for and how to make the application.
You claim Universal Credit online. When you claim, you can ask for an advance payment and you should also ask for a payment from the Universal Credit contingency fund. The advance must be paid back, but you don’t have to pay back the contingency fund payment.
Falling behind on mortgage payments
Get advice if you’re worried about falling behind on your payments. Mortgage lenders have announced a three-month ban on legal action and any action currently underway at court is likely to have been adjourned as a result of court closures.
Talk to your lender if you’re having financial difficulties. Keep a record of all communication with the lender. This will be important if the matter does end up in court as you can show the court that you tried to work with the lender and kept them updated.
Missing a payment when a court order is in place
Contact your lender if you have a payment arrangement or suspended possession order in place and you are going to miss a payment. Keep a record of any communication you have had with the lender about your situation. If contact was made by telephone, ask if the call will be recorded and take a note of the time and date the call was made.
What happens to scheduled court hearings about mortgages and repossession?
All matters listed for the Chancery office, which deals with mortgage repossession cases, have been adjourned generally.
This means that legal action can’t proceed at the minute and the lender will have to apply for a hearing again once the courts have resumed normal business.
If you had made an agreement with your lender and intended to get the court to approve this agreement by making a suspended possession order, get advice.
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.
The country is now in lockdown. It is essential that you stay at home. Read the government’s advice to find out under what circumstances you can leave your home.
Read the advice on how to self-isolate. Remember to stay at least 2 metres (3 steps) away from other people and to wash your hands thoroughly and regularly.