Whilst the primary concern right now is health, financial wellbeing is important. With the uncertainty of what the future looks like many people are worrying about paying bills, mortgage and other bills.
In this guide, we cover a few things that might help ease the financial pressure immediately, covering some of the basic schemes the government have implemented and what employers can do to help.
Three-month mortgage payment holidays are available for those who are struggling. Last month, The Chancellor agreed with banks that they would offer tolerance and help on mortgages. A three-month mortgage holiday allows customers a temporary break from having to make mortgage payments during this period. Don’t forget that you will still be charged interest for the time you’re not making payments which will be added to the total cost of your mortgage.
As it’s just a holiday the payments you ‘miss’ will be spread over the rest of your future monthly payments. If you didn’t want to do this you could extend your mortgage term, adding 3 months onto your term.
You can apply for a mortgage holiday online although the system might be slower than usual as the UK Finance report 1.6 million people have taken a payment holiday since the scheme was announced.
If you struggle to pay the rent during coronavirus you should speak to your landlord about a repayment plan. However there is no set legislation in place which protects tenants, the government guidance is “encouraging tenants and landlords to work together to put in place a rent payment scheme”. The only support the government has given to tenants is confirming that landlords need to give three months’ notice before starting eviction proceedings.
Loans and credit cards
It’s not just mortgages, banks are helping those struggling to repay personal loans and credit cards. The FCA (Financial Conduct Authority) brought in help for credit card and loan customers last month, insisting that lenders need to offer payment holidays where customers were struggling to pay.
If you still haven’t requested a payment holiday you have until 14th July 2020, if your application gets granted you then won’t need to pay anything towards your loan or credit card for up to three months. Because it’s a tough time for everyone, lenders more than likely won’t ask for proof of struggle, however, that doesn’t mean you should apply for a payment holiday regardless. Like mortgage holiday payments, you will still be charged interest after the first month, which means, in the end, you might end up paying very slightly more overall.
It’s worth noting that lenders can choose to give a longer holiday with no interest rates however there is no regulatory requirement to do so.
The FCA also introduced measures to help borrowers with car finance plans, who can now also apply for a three-month payment holiday if they’re struggling due to coronavirus. The FCA introduced measures which mean that car finance lenders can’t repossess vehicles if you’re struggling due to coronavirus.
With interest rates of overdrafts recently rising to 40% earlier this year, there was huge scope for these to be extremely dangerous in the pandemic. Now though, there’s a temporary relief for everyone from these rates. The banks must give £500 of customers overdraft interest-free for three months to customers struggling due to coronavirus. Customers must approach the banks about this though. The FCA has also instructed the banks that no one pays more for their overdraft than before. The banks put these measures in place by the 14th of April.
How can employers help?
Above are just some of the ways people can seek financial help during this troubling time. But there are also things employers can be doing to support employees during this time.
It might be beneficial for employers to take stock of some of the key components of financial wellbeing strategies. With the extra time spent at home, encouraging employees to take the time to really understand their financial situation, whether this is setting financial goals, understanding their pension a bit more or getting control of their household budget. If employees have less daily expenditure during this period, then encourage them to save this money instead. You could encourage savings challenges for example or signpost employees to different saving related content.
Employers can also help by getting Wagestream. By allowing employees to access a percentage of their earned wages, employees can get access to the liquidity they need when they need it. Alleviating the financial pressures surrounding this time.