Money & Debt
Our Money and Debt Team have put together some helpful FAQs around financial issues during the COVID-19 crisis.
The Government has announced that if you are affected by the coronavirus and struggle to pay your mortgage you may be able to receive a three-month payment holiday.
You should contact your mortgage lender directly, as each lender has varying terms and conditions regarding the payment holiday. Your lender will look at individual circumstances and offer support on a case-by-case basis. If a payment holiday is agreed, then it should not affect your credit rating. You can only get a payment holiday if you are not in arrears and are up-to-date with payments.
It is advisable to check your lender’s website for the easiest way to contact them regarding this. Most companies are experiencing extreme numbers of calls at the minute and have provided an online application form.
If your lender allows a payment holiday, then this means you will not have to make repayments for three months. However, interest will continue to accrue during this time and you will need to make up the payments that have been deferred.
When your repayments start again after the payment holiday, the lender will recalculate them, and you may see an increase in your monthly payments. Therefore, it is important to ask the lender how much you will have to repay when you apply for a holiday. The total amount of interest you pay over the term of the mortgage will also increase.
You may not be able to switch your mortgage to one of your lender’s other products whilst on a payment holiday. If you want to switch soon, please switch before you request a payment holiday.
If you have an overpayment reserve, you may want to consider underpaying for a short period instead.
Find out more information by going to the Money Advice Service website.
Housing Executive tenants
The Housing Executive will not be taking legal action to evict tenants where financial hardship is suffered as a result of coronavirus.
If you have any concerns about your ability to pay rent, contact the Housing Executive as soon as possible. Their staff can talk you through your situation and options available to, including benefits and other help and support you can access.
Visit their website or contact their General Enquiries Helpline on 03448 920 900.
Housing Association (HA) tenants
Housing associations in Northern Ireland have given a commitment to treat all rent issues with sensitivity and they will support tenants through this difficult period. HAs are not currently planning on introducing a rent suspension.
Where tenants require assistance, advice or additional support if they cannot pay rent owed because of a loss of income, then HAs will step in to assist. HA welfare advisers and housing officers are already assisting tenants in the Housing Benefit /Universal Credit claim process and will work with them to develop a repayment plan that they can afford, if the need arises.
Housing associations here are reviewing the situation regularly and will revise their approach accordingly. Where possible, HAs are putting additional resources into their welfare/money advice teams to support those who may be struggling due to coronavirus, especially tenants who have been laid off temporarily. Associations will look at each case on its merits and make every effort to avoid evicting tenants.
Find out more information from the Northern Ireland Federation of Housing Associations.
The Finance and Leasing Association (FLA), said that supporting customers over the next few months will be absolutely vital – especially for those whose income is severely affected by the coronavirus disruption.
The FLA stated firms should be showing forbearance during these extraordinary times and the need to help customers is paramount. For people unable to meet monthly payments or the end of agreement balloon payments, the FLA has stated that forbearance should mean cars remain with drivers, rather than being repossessed.
You can find the contact details of your lender on your finance agreement, but if you need further assistance, you can email firstname.lastname@example.org.
If you’re going to struggle to meet your repayments because of coronavirus, talk to your car finance company as soon as you can. They might offer to extend the cost of the contract, which would lower your monthly payments, or come to another arrangement, such as delay a balloon payment or have interest suspended.
Three of the biggest credit reference agencies have said that payment holidays taken as a result of coronavirus will not affect credit scores. Experian, Equifax and TransUnion all say that this ‘emergency payment freeze’, as they call it, includes mortgage payment holidays.
How will a payment holiday be reflected on my credit report?
If you and your lender agree an emergency payment freeze, the payment status of your account (with that lender) will not get worse while your payments are paused. For example, if your account was up to date before the freeze began, your account will continue to show as up to date until the freeze ends. If you were already behind with payments, the level of arrears before the freeze began will continue for the duration of the freeze. During the freeze, the monthly payment amount shown on your report will stay the same.
Will the payment holiday be recorded anywhere on my credit report?
No, the fact that you agreed a payment freeze with a lender or provider will not be recorded on those accounts or anywhere else on your credit report.
How will a payment holiday affect my credit score?
Agreeing with lenders to pause your payments for a while should not result in missed payments building up on your credit report. This should generally mean your credit score won’t be damaged. Please bear in mind that, as well as the payment status of your accounts, credit scores also take account of many other factors, such as your total level of unsecured debt (for example, the balance of any credit cards, personal loans and overdrafts) and how heavily you are using your credit cards (your credit utilisation).
Could the payment holiday impact my ability to get credit in the future?
Under the Emergency Payment Freeze agreement, an individual’s credit score will be maintained or frozen for the duration of the agreed payment holiday. CRAs cannot guarantee that payment holidays will not impact a consumer's ability to get credit in the future, as lender policies will be different across the industry. This should be discussed with your lender directly.
There are a few different types of financial support you may be entitled to access if you are in a financial crisis. Help with short term living expenses may be available through Discretionary Support or the Universal Credit Contingency Fund grant or the COVID 19 grant.
For more information on this financial support please visit https://www.nidirect.gov.uk/articles/coronavirus-covid-19-and-benefits
If you’re pregnant or just had a baby and are on a low income and get certain benefits or tax credits, you could get a Sure Start Maternity Grant. This is a one-off, tax-free payment to help towards the cost of maternity and baby items. For more information please visit https://www.nidirect.gov.uk/articles/sure-start-maternity-grant
If you're on a low income and need help with certain important costs, you may be able to get an interest-free Budgeting Loan from the Social Fund that you pay back. For more information, please visit https://www.nidirect.gov.uk/articles/budgeting-loans
If you don’t have any savings and are facing an emergency cash shortfall, try and use borrowing as a last resort.
If you can, you could ask family or friends to help you out until your payments come through. This would be a cheap way of getting extra money. You could approach your credit union or bank to see what they could offer you in the interim period.
It is important to remember that high interest, short term lending comes at a high cost. The money will have to be paid back within a short period and when the high interests are included you could end up repaying back a high portion of your income. If you do have to access this type of lending, shop around, understand how much has to be paid back and by when and what penalties will accrue if you miss a payment.
If you can try to avoid illegal lenders like Loan Sharks. They have high interest rates and some can have severe consequences if you do not repay. It would be important to try all other avenues before considering borrowing from these lenders.
On Thursday 9 April the Financial Conduct Authority announced a package of targeted temporary measures to help people with some of the most commonly used consumer credit products, including Overdrafts. The rule changes will be in force from today and the full range of measures will apply by Tuesday 14 April 2020.
Lenders must give up to the first £500 of a customer's overdraft interest-free. If you're struggling financially due to coronavirus (or think you'll struggle in future), you can ask your bank to make the first £500 of your overdraft interest-free for at least three months. If your overdraft limit is less than £500, your bank must give you your whole overdraft interest-free.
Lenders must ensure that no one pays more for their overdraft than before. As we say above, the move to charge interest rates for overdrafts left some facing higher charges. The FCA's ordered banks to ensure no one pays more for their overdraft than they would have done under the old system for the next three months.
You should check your lenders websites and where possible use online services to request assistance.
I am the sole director of a Limited Company and paid solely by dividends. Am I eligible for the job retention scheme?
To be eligible for the governments’ Coronavirus Job Retention Scheme, you must have created and started a PAYE payroll scheme on or before 28 February 2020, be enrolled for PAYE online, and have a UK bank account.
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
As office holders, salaried company directors are eligible to be furloughed and receive support through the scheme. Company directors owe duties to their company which are set out in the Companies Act 2006.
Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed.
Where an individual directors’ furlough is decided by the board, this should be formally adopted as a decision of the company. It must be noted in the company records and communicated in writing to the director concerned.
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose.
For instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
Please visit https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#claim for details on how to claim.