The current situation with regard to COVID 19 is causing a lot of anxiety and fear throughout the country but can also be causing some financial distress to some. Below are some guides, tips and links to information that might be useful to you or your family.
To keep up to date about COVID 19, visit gov.uk/coronavirus
If you are an employee within a company and not working as a result of COVID 19, your company could make you furlough.
In this scenario you would receive 80% of your pay, up to a maximum of £2,500 a month.
For more details: Check if you could be covered by the Coronavirus Job Retention Scheme
There might be help for you if your profits are below £50,000. You could receive 80% of your profits to a maximum of £2,500 a month.
Help can include delaying a tax payment and VAT, grants and business interruption loan schemes. The rules are changing on this so you should speak to your accountant or tax adviser to see what options you have.
Mortgages and renting
If you have a mortgage:
Lenders have confirmed a 3-month payment holiday from your mortgage may be available if you are struggling financially due to COVID 19.
Do not just cancel your direct debit, it has to be agreed first by your lender. The simplest way to do this is through the lender’s website – the forms you need to complete are generally very straightforward. You can try calling, but lenders are currently being inundated with requests and queries. Once agreed, it will not affect your credit score.
Lenders typically have two ways for recouping repayment of the missed payments.
- One option is for you to repay it back over the remaining term - yes you will pay interest, but it could you the much-needed cash flow at this present time. As an example, on a £150,000 repayment mortgage on an interest rate of 1.8% with 20 years left to run, would see your monthly payments go from £745 to £756 so an increase of £11 to your monthly payment.
- The other option is that your mortgage term is increased by 3 months. Most lenders seem to be doing the first option, however this is dependent on your mortgage.
For more useful information, check out: Mortgage holidays offered during uncertain times
If you are renting:
The Government recently announced emergency legislation suspending new evictions from social or private rented accommodation during the coronavirus crisis.
Your landlord will not be able to apply to the court to start possession proceedings until you have missed rent payments for at least three months.
Mortgage lenders have confirmed that the 3-month payment holiday also applies to buy to let mortgages, allowing landlords some flexibility. So if you are experiencing financial difficulty, landlords shouldn’t put any pressure on you to meet rent payments during this time.
If, after three months, you’re still unable to meet rent payments, your landlord should be exploring all avenues to ensure that you continue to stay in your home. They will be expected to take into account your financial circumstances and try and work out an affordable repayment plan with you before they start any proceedings.
If you’re a social housing tenant, talk to your tenancy support officer or housing officer who will be able to support you and work out an affordable repayment plan.
Take a look at the Money Advice Service website for more information.
Councils are reacting differently, and it would be worth checking with them to see what option you have if you are under financial strain due to COVID 19. The quickest way to do this might be to check their website. Most councils will now have a COVID 19 frequently asked questions page.
Some councils are offering payment holidays or reduced payments and have stated no enforcement action will be taken during the pandemic.
While family members might not be working, some nurseries may still be asking for fees to be paid as nurseries are trying to stay financially afloat.
Most legal contracts say you still have to pay your fees if the nursery is temporary closed.
Some nurseries have business interruption insurance, but the Association of British Insurers has stated this scenario would not be covered.
It would be worth speaking to your nursery to understand their current position as there have been some developments on this.
- Nurseries are still going to get the early year funding
- Nurseries have been added to the business rates holiday
- Staff can be furloughed so speak to your nursery to see if you can reduce your fees or not pay them.
9 out of 10 cars on the road are financed in some way. Lenders are offering various options if you are struggling with your payments, including payment holidays or reducing payments.
Solutions will differ from lender to lender, but generally they will present all viable options and look to work with you to come to an agreement. This approach has been backed by the FCA who have made it clear there should not be any repossessions or termination of agreements due to COVID 19.
You can find more information on the FCA website.
Since 30 March 2020, if your car is due its MOT during the period of lockdown, you will be given a six month extension.
Overdrafts, personal loans and credit cards
Overdrafts are increasing to 40% interest. However, during the pandemic, banks will charge 0% interest on the first £500 of overdraft. Each lender can be different, so some might go above the £500 - check the exact position with your lender.
Experian has provided a helpful list of lenders and their current responses for customers in light of the Coronavirus outbreak - find the table here.
Lenders are offering various solutions to those with personal loans and credit cards looking for assistance. In most cases you should be able to apply for a freeze on your repayments for 3 months. It is important to speak to them to see how they can help and get agreement from them. Do not simply cancel your direct debits. Taking a payment holiday should not affect your credit score but your lender will confirm that. Be aware that interest will still be accrued. Again, use the table on Experian's website to see what help lenders are providing.
More information in regard to personal loans, credit cards and overdrafts can be found on the FCA website.
Energy and water bills
Suppliers are coming up with different solutions that can include, payment holidays, re-assessing your current plan, delaying bills, removing late payment fees, allowing payments over longer periods.
Suppliers are also ceasing debt collection during the pandemic and suspending disconnection.
Each supplier has a different approach, so make sure you speak to them.
Should I pay the third term rent as face to face teaching has stopped? Universities are dealing with this differently. If you are staying in halls and do not need the halls accommodation some universities are saying you do not need to pay. You need to find out the exact position of your university. If you are privately renting you need to speak to the landlord to see what options you have.
Fixed rate savings
The majority of providers have said you can access your fixed rate savings without penalty if you need this during the pandemic. However, be aware you might be removing savings from a rate that you might not be able to access again now that the Bank of England Base Rate has been reduced from 0.75% to 0.25% and then further reduced to 0.1%.
If you are paying for TV packages that you are no longer making full use of, for example sports channels, look to see if these payments can be suspended.
Contactless card payments
The spending limit for contactless card payments has been increased from £30 to £45, which could mean less touching of the keypad.
If you are happy with the security on your phone, consider setting up the contactless payment facility on your phone as at some retailers the limit will be even higher than £45.
Fraudsters are sending out texts and emails to try and get you to part with your money.
Be very cautious about any emails, letters, telephone calls or texts you receive asking for personal or banking details as individuals are using COVID to prey upon people’s fears as part of their scam. Reports show that over one million pounds has already been lost to these scams and is increasing.
Season ticket refunds
If you find yourself working from home and you have an unused train ticket look, to claim it back. The proportion of unused travel can be refunded. This can be done if you have 6 weeks left on a yearly train ticket, 7 days left on a monthly ticket or 3 days left on a weekly ticket. Speak to the train operator or quicker still, action the request through your online account.
Look out for special reduced rates and free services
A lot of companies are offering reduced rates or free offers as a way to give back to those who work in the emergency services or as key workers.
Many people are asking whether their insurance policies would pay out due to COVID 19.
- Life cover policies will pay out in the event of death as a result of COVID 19.
- If you become unable to work due to illness you should check your income protection policy
- If you are made unemployed as a result of COVID see if you have unemployment cover under your income protection policy.
- Critical illness polices are unlikely to pay out unless you are classified as terminal.
If you are a police officer and in the pension scheme, there is life insurance connected to the relevant scheme that you are in.
Under the 1987 scheme, you would receive x2 your yearly pensionable pay.
Under the 2006 and 2015 schemes you would receive x3 your yearly pensionable pay.
In addition to this, you might be part of the Federation’s Group Insurance Scheme, which will pay out £150,000. It is worth checking that your Death nomination forms are up to date to ensure that if the worst were to happen, the money goes to the correct beneficiaries.
If you are a member of police staff and have the staff pension scheme (ie any of the Classic, Nuvos and Alpha schemes), you would receive x2 your yearly pensionable pay. If you are in the Premium scheme you would receive x3 your yearly pensionable pay.
The benefits system is very complex and ever changing. As a working officer you might not be eligible for any benefits, however it’s always worth checking what benefits you may be entitled to, whether individually or a family.
It’s worth doing a quick 2 minute benefit check, like the one on MoneySavingExpert’s Benefits Check page. There’s no need to enter any personal details, it will just help you to ensure you are claiming everything that you’re entitled to.
Some of the recent changes to benefits include Universal Credit (which has recently gone up by nearly £1,000 a year) and the housing element of Universal Credit.
Further information can also be found here: Coronavirus Help for Employees page.
Many companies have extended the window you would normally have for returning goods from the standard 30 day period to 120 days.
- Talk to your lenders and suppliers or visit their websites to find out exactly how they can help you during this time.
- Write down a plan of action but do not try to do it all in one day. Plan to speak to them over a number of days.
- Do a budget to see how your finances are looking – you can use our template here: metfriendly.org.uk/budget-planner
- If you are looking to borrow in the future in might be worth applying now because lending criteria is likely to be tightened in the near future.
- If you are experiencing long term financial problems seek professional advice from a government funded organisation such as Step Change, PayPlan, National Debtline or Citizens Advice as they will speak to your creditors and have solutions for you.
Metfriendly is operating as normal despite the current situation and we have adapted to ensure we can continue to deliver for our members.
Whether you’re already with Metfriendly or looking to find out more about us and our products, we’re available to help by email, phone and over video links.