A guide to finances during the coronavirus outbreak
A guide to finances during the coronavirus outbreak
Coronavirus is impacting people’s finances in a variety of ways, with potentially reduced income and increased household bills as people work from home. We look at what you can do to keep your finances in order and the help that’s currently available.
Please note: The information in this article was correct at the time of publication on 15 April 2020 but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but please check directly with any provider to confirm details.
Government help for people affected by COVID-19
The government has put financial measures in place that can help employees and the self-employed. It has also made changes to the benefits and sick pay systems to help those who have no work or can’t work, are self-isolating or are unwell.
Find out about the help available and changes to the benefits system in the Money Advice Service’s guide Coronavirus – what it means for you.
Budgeting and planning
Financial issues are easier to sort out the sooner you tackle them. You’ll be able to get a clear idea of the overall picture and discover opportunities for action you can take to help your situation.
Making an emergency budget
Have a look at your income and what you’re spending on food and bills, for example, to get an idea of the budget you have to work with.
Estimating your income may be harder if you aren’t working as normal and have applied for Universal Credit, are being paid under the Coronavirus Job Retention Scheme or are self-employed.
Many employers have furloughed employees under the job retention scheme so they can get back up to speed as quickly as possible when the coronavirus crisis eases.
You should also make sure you’re claiming all benefits you’re entitled to. If you’re put on 80% pay, you may be eligible for benefits you weren’t previously.
If you are in, or anticipate being in, financial difficulties, see where you can cut back over the next few weeks. Consider what non-essentials you can go without and where savings can be made.
For most people, their biggest expense is their mortgage or rent. See how you can get help with these later in this article.
Other large regular expenses will be household bills. Have a look at recent bills to give you an idea of how much you could potentially save. Remember, if you’re now at home all the time, your energy bills might be slightly higher than usual. On the other hand, with no sport on TV, you might be able to switch your broadband and TV to a cheaper package.
Have a look and see if you can find a better deal on:
- Dual fuel (both gas and electricity from one supplier)
- Mobile phone
- TV packages
If you’re still in contract, say for a mobile phone, or on a fixed-term energy tariff, check any savings you could make are higher than any penalty you might pay for leaving your current contract.
You may want to see if you can cut the costs of your TV package. It’s worth knowing that Sky is allowing subscribers to pause Sky Sport until the action resumes.
See how to pause Sky Sports for subscribers.
BT has said that, as this is a difficult time for customers, they can call and discuss their BT Sport contract or other options. Alternatively, customers on its new flexible TV package can pause their Sport subscription and switch to a different package, if they wish.
Remember, if you’re a tenant and your name is on the bill, you can switch suppliers if you choose. You don’t have stick to the one your landlord has chosen.
Cover from insurance policies
You may have insurance that could cover your mortgage payments or replace some of your income. For example:
- accident, sickness and unemployment insurance
- payment protection insurance
- mortgage payment protection insurance
Sometimes, these types of insurance are offered with mortgages or life insurance policies, so you may have forgotten that you’ve got cover.
Typically, there’s a delay before these policies will pay out, maybe up to a few months. Some policies will only pay out for a loss of income and not when income has reduced. You should check the terms and conditions of your policy and talk to your insurance provider about your situation to find out more.
Penalty-free access to savings
Given the unprecedented situation, some banks have said they’ll waive penalties if you have your money in a fixed-term account and need to take it out before the end of the term. See more on accessing your savings and check directly with your bank or building society.
Things to consider if you’re having financial difficulties
Having put together your budget, you should know how much money you have left over. If you can see that your outgoings are going to exceed your income, talk to the companies or providers you owe money to before it becomes a problem.
Help with mortgages
Mortgage repayments are likely to be one of your highest outgoings.
If you’re having, or think you’ll have, difficulties paying your mortgage because of the coronavirus pandemic, you might be eligible for a mortgage payment holiday.
Providers are reviewing each customer’s individual circumstances, so it’s best to get in contact with your provider directly, discuss your options and agree next steps. You should not just stop making your repayments for three months.
Some providers are allowing you to apply online for these payment holidays, which could save a long wait on the phone, so check your provider’s website and see if this is possible.
If your mortgage is coming to an end soon and you’re not sure what to do, it can be helpful to get advice from a mortgage expert, particularly at this uncertain time, and with the recent change to interest rates.
It can be tricky to weigh up your options, as you need to take into account not just the interest rate but also the fees for remortgaging. So, you might benefit from searching the market in advance for a cheaper deal.
Using a mortgage broker can help you to consider your options and understand the current deals in the market. L&C, our mortgage broker partner – 0808 292 5714 - can provide support and answer any questions relating to your current situation.
Help for renters
The UK government has said all new evictions should be put on hold for three months during the coronavirus outbreak.
If you’re a social housing tenant having difficulties, talk to your tenancy support officer or housing officer, who’ll be able to support you and work out an affordable repayment plan.
Private landlords are also being given the opportunity to apply for a mortgage holiday if their tenants are experiencing financial difficulties because of coronavirus.
If you’re unable to pay your rent, see if you can claim benefits. It can help to contact your landlord and keep them informed about what you’re doing to resolve the issue and see if there’s anything they can do to help, too.
In Scotland, there is currently speculation that the government plans to increase the period protecting tenants from eviction for non-payment of rent from three months to six months.
Help with gas and electric bills
Many people are worried about being able to pay their energy bills, especially as spending more time at home means using more gas and electricity. The energy industry is working with the Government to help households affected by the coronavirus outbreak. Help on offer varies from supplier to supplier. It can include:
- reviewing bill payment plans, including debt repayment plans
- payment breaks or reductions in how much you pay
- giving you more time to pay
- access to hardship funds
See more details on what individual energy companies are offering in our guide: What should I do if I’m having problems paying my energy bills because of coronavirus?
Help with water bills
Water companies are offering similar help options to energy companies. If you don’t think you can pay your water bill, speak directly to your supplier.
Loans, credit cards and overdrafts
If you have a loan, credit card, store card or catalogue credit and are experiencing a change in financial circumstances because of coronavirus, you can now request a freeze on repayments for three months. This measure came into force on 9 April and all firms will be ready to receive customer requests by 14 April.
See more about the options available to you around credit cards during the coronavirus epidemic.
See more on loans and coronavirus.
The FCA has also introduced measures allowing customers to ask the provider of their main current account for up to £500 of borrowing on an arranged overdraft with no interest for three months. Again, this change is in force from 9 April, and all firms will be ready to receive customer requests by 14 April.
See more on overdraft measures from the major banks in coronavirus and current accounts.
The FCA warns that although the measures are designed to help you, they may result in increased costs in the longer term. So, think carefully before you enter into one of these arrangements and only do so if you need immediate, temporary financial help.
If you can afford to make some repayments – even if it’s a smaller amount than usual – you should continue to do so. Although your credit file won’t be impacted during the repayment freeze period, interest will continue to build.
You need to contact your provider to request a payment freeze – don’t just stop making repayments. It might be easier to get in touch online rather than by phone.
Car finance payments
The FCA’s measures to help loan and credit card customers don’t cover car hire purchase or leasing agreements, although it says it is looking at these areas. But many banks and other lenders, like car finance companies, will help people struggling to repay personal loans. They might, for example, suggest extending the loan or finance plan to help reduce your monthly payments. Please note that extending the loan will most likely result in you having to pay back more money in total over the term of the loan or finance plan.
If you want to consider taking your car off the road altogether to save on tax and insurance, you’d need to make a Statutory Off Road Notification (SORN). You won’t be able to drive or park your car on a public road while this is in place.
See more on this and how coronavirus is affecting cars and motoring.
If you’re worried about debt
If you’re in debt and you’re worried, there’s free help available to get you back on track. But remember, these services are likely to be very busy at the moment. To find help, use the Money Advice Service’s debt advice locator tool. This can point you to your closest source of assistance and offer help over the phone if you’re self-isolating. It includes Citizen’s Advice, StepChange, National Debtline and other local organisations.