How to keep your family finances safe in the great emergency shutdown
PHYSICAL health is at the top of all our minds, but coronavirus could have a severe impact on your financial health too. It is crucial that you prepare for the coming months to ensure your finances are as insulated as they can be from the fallout.
The good news is that many institutions such as banks, insurers, employers and transport firms are putting emergency measures in place. Last week, the Government
unveiled a £330billion package for businesses, while the Bank of England slashed interest rates to a record low of 0.1 per cent. Then, on Friday, the Government announced measures to safeguard workers’ wages.
If you are worried about any aspect of your finances – from mortgages to loans, credit cards to access to savings – contact the provider to see what can be done.
Help being offered includes mortgage and loan repayment holidays, waiving late or missed payment penalties on credit cards and relaxing access restrictions on fixed-term savings accounts.
If you are unable to work or have no work because you are self-employed, safety nets are being put into place.
As well as constant updates from the Government, there are many organisations giving sound advice. The key is not to panic, but also not to bury your head in the sand. These are tough times, but there are many things you can do to ease the financial pain of the current situation.
GUARANTEEING A BIG SLICE OF WORKERS’ WAGES
THE Government is stepping in to pay a big proportion of private sector wages for the first time in history under plans announced on Friday by Chancellor Rishi Sunak.
The coronavirus job retention scheme means organisations will be able to apply for a grant to cover the wages of people who are not working due to coronavirus shutdowns, but who have not been made redundant.
It will cover 80 per cent of the salaries of staff, up to £2,500 a month, which is close to the average salary.
There will be no limit on the total funding available. It will be backdated to the start of March and will be available for three months.
The Chancellor also announced more help for the self-employed, including easier access to Universal Credit. He also pledged £6billion of extra support through the welfare system to help financially challenged families through the crisis.
MORTGAGES AND GETTING A PAYMENT HOLIDAY
FOR many homeowners, their biggest outgoing is the mortgage, so the announcement of a three-month mortgage holiday could be a lifeline.
Contact your lender, as many are tailoring their approach case-bycase. Many people will be calling up, so consider applying online. Those not up to date with mortgage payments might not get the same deal but should still receive concessions.
Don’t forget that while a mortgage holiday is great in the short term, the missed payments will be added to the outstanding balance when it is over – raising your monthly repayments.
An alternative is to switch from a capital repayment to an interest-only mortgage for a fixed period. This means your outstanding loan will not reduce, but your repayments will be lower because you are not repaying any of the capital – just the interest.
Nick Morrey, of mortgage broker John Charcol, says borrowers need to check exactly what mortgage holiday terms their lender is offering.
He asks: ‘If you take a three-month mortgage holiday, then is your bank going to increase the overall term of your mortgage by three months, or will it stick to the original length?’
Check whether suspended repayments will affect your credit rating and whether it will be possible to extend the mortgage break beyond three months.
For those in extreme difficulty, the Financial Conduct Authority has told mortgage providers to hold off repossessing homes during the crisis unless they can ‘demonstrate clearly that the customer has agreed it is in their best interest’.
WAIVING CREDIT CARD AND SAVINGS ACCOUNT PENALTIES
MANY banks are promising to waive penalties for missed payments on credit cards – as well as loans and mortgages. If you have outstanding debt on a high-interest credit card, now is the time to switch to a zeroper cent deal, listed on websites such as moneysavingexpert.com.
Your existing provider might also be open to switching your balance to one of their own deals with a lower rate of interest. Barclaycard, for example, says existing customers can apply to move to a new card if they have held their current card for six months.
Many lenders, including Barclaycard, are waiving fees for cash advances. But taking out money on a credit card usually attracts doubledigit interest – even after Thursday saw the Bank of England base rate cut to 0.1 per cent. Many banks are also waiving fees or notice periods on access to fixed-term savings – or are allowing a fee-free transfer into easy access or current accounts.
QUALIFYING FOR
SICK PAY AND BENEFITS
IF YOU are employed and get coronavirus – or are unable to work due to self-isolation (whether you or a family member has symptoms) – you qualify for statutory sick pay.
It is worth £94.25 a week and kicks in straight away – ‘available for eligible individuals diagnosed with Covid-19 or those unable to work because they are self-isolating in line with Government advice’. By law, medical evidence is not required for the first seven days of sick leave, but after a week, your employer can ask to see a sick note. The Government is setting up an online service – at 111.nhs.uk – for those needing a sick note.
If you are self-isolating but able to work from home, you should be paid as usual by your employer. But if you’re self-employed then you can’t claim sick pay. Here, the Government has made it easier for people to claim either Universal Credit or contributory Employment and Support Allowance. You will not need to visit a job centre if advised to self-isolate.
If you are made redundant, you may be entitled to redundancy pay if you’ve worked for an employer for two years or more. Check your rights at citizensadvice.org.uk.
For more on statutory sickness pay visit gov.uk/statutory-sick-pay.
To apply for universal credit, go to gov.uk/apply-universal-credit or call 0800 328 5644. Key details relating to the current crisis can be found at understanding-universal credit.gov.uk/coronavirus.
For Employment and Support Allowance visit gov.uk/employ ment-support-allowance/eligibility.
GETTING YOUR RENT PAYMENTS SUSPENDED
BRITAIN’S 20million tenants, worried about missing payments, received a boost from legislation to protect private renters from eviction. As a result, landlords will not be able to start proceedings to evict tenants for at least three months.
The three-month mortgage payment holiday extends to landlords whose tenants experience financial difficulties due to coronavirus.
The National Housing Federation said housing associations would not evict tenants hit by the virus and who fall behind on payments. Visit the National Housing Federation’s website at housing.org.uk
Those who have benefited from a Government-backed Help to Buy equity loan will be offered interest payment holidays if they are struggling to pay due to coronavirus.
You can find out more at the website helptobuy.gov.uk.
REFUNDS FROM CANCELLED EVENTS
IF A concert, play or other entertainment has been cancelled with no prospect of a rearranged date, you should get a refund from the organiser. You might not get back your booking or delivery fees. If the event is postponed, your ticket will be valid for any future show. But if you cannot make the revised date, you should be entitled to a refund, so contact the organiser or the company you bought the ticket from.
If you have bought through a secondary seller such as StubHub or Viagogo, contact them direct for a refund. If it is rearranged and you can’t make it, you might be able to resell tickets on the website.
Some organisers of smaller events are asking people not to request a refund but to treat the cost as a donation, so do consider that option to support independent arts.
Glastonbury is offering everyone who paid a £50 deposit on tickets the chance to roll it over for next year’s event. Those seeking a refund should go to glastonburyfestivals.co.uk. The Grand National is offering a full refund. Visit thejockeyclub.co.uk.
IF YOU HAVE TO CHANGE YOUR TRAVEL PLANS
MANY train operators are waiving fees if you need to change travel plans. Booking website Trainline offers people the chance to change travel dates to any date within 12 weeks – and then change again if necessary. It is also waiving all change and refund fees.
If you are working from home and longer need your season ticket, contact the train operator to find out about refunds. You might be charged an administrative fee. But some, such as Transport for London, waive them for self-isolators.
For standard train travel, all rail firms are suspending the £10 fee on refundable tickets. If you have an off-peak or anytime ticket and decide not to travel due to concerns about coronavirus, you can get a full fee-free refund from the seller.
If your flight has been cancelled, you should be able to apply for a refund, though some airlines might suggest rebooking for a later date (and have waived the fees to do so). This might not be practical in many cases, so contact them to ask for a refund. If they refuse, you might have to claim on travel insurance.
STRUGGLING WITH ENERGY BILLS
PROVIDERS say they will support customers having difficulty paying their bills due to coronavirus.
Companies such as EDF Energy, British Gas, E.on, SSE and Npower are implementing measures including allowing some customers to make repayments over a longer period, delaying repayments, extending emergency credit, accessing hardship funds and allowing friends and family to topup pre-paid meters.
Contact your energy provider to find out more. sarah.bridge@mailonsunday.co.uk