First published 1st April 2020
Coronavirus has created unprecedented and far-reaching financial uncertainty for countless UK households.
If you’ve lost your income, the first port of call is to check if you qualify for state benefits (as well as statutory sick pay if you are self-isolating). The government has relaxed some rules around claiming, so head over to the Gov website to find out.
But help is also available if you are struggling to pay your household bills. We’ve rounded up the answers to the most frequently asked questions below. Do bear in mind it’s an ever-evolving situation, so we’ll be updating this page when things change.
What can I do if I’m struggling to pay my energy bills?
Disconnections have been completely suspended, so you won’t lose access to your energy. But, if you feel you will fall into difficulties, get in touch with your supplier.
Most are offering some of the following measures for people struggling to pay:
- Bill delays
- Waived late payment fees
- Spreading out repayments
- Alternative payment methods
Water companies are offering similar measures – but you’ll have to call and ask.
I use a prepayment meter for my gas and electricity. What should I do?
Energy regulator, Ofgem, has ordered suppliers to take ‘proactive measures’ to support prepayment meter customers – especially those who in vulnerable circumstances. Get in touch with your supplier to find out how it can help you.
If you are self-isolating and have a prepayment meter, solutions include the energy supplier adding credit direct to your meter, posting credit-loaded cards to your address or letting someone you nominate top up for you.
Can I still telephone my energy provider?
You should be able to get through to a customer service representative using the standard phone number – it may just take a little longer. If you don’t have time, your best bet is to send an email or use its online chat function if it has one.
I was due to have a smart meter installed. What happens now?
Suppliers are now starting to take bookings for smart meter installations again – so long as you are not considered high risk and are not showing coronavirus symptoms.
Can I still switch energy providers?
Yes. The pipes, meters and energy are all the same. The only difference will be who sends your bill. Suppliers are telling us there is no delay to switching times currently either.
What help is available for mortgage borrowers?
Regulator the Financial Conduct Authority (FCA) has ordered banks to give mortgage customers who are struggling to make payments because of coronavirus a minimum three-month payment break.
This was implemented on 17 March but you can apply for another one if you are still struggling from 4 June. If you’ve not yet applied, you can make your request until 31 October.
Note, however that this isn’t free money: you’ll have to pay the sum back in the fullness of time – and with interest. You just won’t be penalised on your credit score for missing payments in the short term.
Who can apply for a mortgage holiday?
Anyone who holds a mortgage is currently permitted to apply for a mortgage holiday – although you are not legally entitled to one.
How do I apply for a mortgage holiday?
Contact your mortgage lender with details of your mortgage account to hand. It may be quicker to do this online.
If your mortgage payment freeze is approved, bear in mind some lenders will require up to 10 days’ notice so it may not kick in until the following month.
Do I need to prove I have been impacted by coronavirus?
Many lenders are offering fast-track approval, so you may not be asked to provide evidence of your situation or undergo means testing.
However, you will still need to answer all questions accurately. And you should only apply for a mortgage payment holiday if you are struggling as a direct result of coronavirus.
When will I have to repay the deferred payments?
How you eventually repay what you owe from your mortgage holiday varies between lender. However, it’s most likely to do one of the following:
- Spread the cost of the shortfall across the remaining term of your mortgage (resulting in bigger monthly payments once the holiday has ended)
- Increase the length of your mortgage term (but keep payments the same)
Will taking a mortgage holiday affect my credit score?
Provided you have a formal agreement in place to take the payment holiday and you meet your repayment obligations once it has come an end, it will not affect your credit score.
That said, banks consider wider factors when deciding whether or not to lend – such as the balance of your mortgage debt over time – which can impact your chances of being accepted. In short, the decision to apply for a payment holiday should not be taken lightly.
Our score partner TransUnion also adds that you should always make sure your lender records it properly on your credit file.
Find out more at our mortgages and coronavirus guide.
What help can I get with credit card repayments?
The FCA has ruled that credit card holders must be able to request a minimum three-month payment holiday on card repayments, during which time you will either pay nothing or an agreed nominal sum.
You have until 31 October to contact your credit card provider and ask for one.
If you are coming to the end of an existing holiday and are still struggling because of coronavirus, you can apply for a further three months.
The same goes for other retail revolving credit, such as store cards and catalogues.
Bear in mind that this new wave of provision is likely to be more considered and tailored to your circumstances – rather than the ‘blanket holiday’ you may have been offered the first time around.
Will I still be charged interest?
Credit card providers will still be permitted to charge a ‘reasonable’ rate of interest over a payment holiday. Bear in mind this interest will build up over time and will work out more costly in the long-term.
APRs (annual percentage rates), particularly on store and credit cards, are expensive so only take the payment holiday if you really need to.
If you can’t make the minimum repayments and can afford to do so, consider paying a smaller sum instead.
Will my credit score be affected?
As with mortgage payment holidays, an agreed payment holiday on your credit card or store card will not negatively impact your credit score.
That said, payment holidays will still be visible to lenders and they are entitled to take them into account when you make applications for future credit.
This means you could be especially affected if you continue to take advantage of the new wave of payment holidays – so only take it if you really need to.
What help can I get with personal loan repayments?
The same extension applies to personal loans. From 3 July, you will be able to apply for a new three-month payment holiday on personal loans up until 31 October. If you are coming to the end of an existing holiday and still struggling, you can apply for further help.
The deferred debt would be repaid by either spreading the cost of the shortfall across the remaining term of your loan (resulting in larger monthly payments) or increasing the length of your loan term (but keep payments the same).
Again, interest will accrue during your loan payment holiday, so only take it if you really need to.
Agreed payment breaks will not affect your credit score but bear in mind that lenders are entitled to take them into account when you make applications for future credit.
What about my payday loan?
A minimum one-month payment freeze has also been applied to payday lending. And crucially here, the interest – which is often notoriously expensive – can accrue in that time.
What about other short-term debt?
Three-month payment holidays are also available on rent-to-own, buy-now-pay-later and pawnbroking sectors. Proposals have now been published by the FCA to extend these payment holidays for those who need it, while borrowers yet to request help would have until 31 October to do so.
Can I get a holiday on my car finance loan?
The same three-month payment break is available for those struggling to pay their car loans. As from Friday 17 July, customers who have not yet had a car loan payment freeze – or requested an extension to an existing one – will have until 31 October to do so.
Finance companies will not be able to repossess vehicles during the payment holiday.
What about overdrafts on current accounts?
All banks must offer the first £500 of an overdraft interest-free to customers affected by coronavirus. The rules apply to current account holders who already have an overdraft facility – although you should be able to request one too if you are struggling.
The forbearance on overdrafts was originally due to end in mid-July but the FCA has confirmed this will be extended from Friday 3 July – alongside credit and store cards, and personal loans.
This means if you’ve yet to seek help from your current account provider – or you already have but need to extend it as you’re still struggling – you have until 31 October to contact your bank and ask for more help.
Separate FCA legislation implemented from 6 April ruled that current account providers must charge one single rate of around 40% interest (APR) on both arranged and unarranged overdrafts, with no additional daily charges.
The FCA said that nobody paying the 40% rate should be worse off than before the rules were introduced.
Interest Rate Cut
Will the cut in base rate mean cheaper borrowing?
In March, the Bank of England’s monetary policy committee (MPC) reduced the base rate on two separate occasions, taking it from 0.75% down to its current miniscule 0.1%. But could this have a positive effect on your borrowing?
Mortgages: if you have tracker mortgage, you should see the total 0.65% reduction passed on immediately, meaning your monthly repayments will also fall. Lenders should also pass on the full reduction to their standard variable rates. If you have a fixed rate mortgage however, your payments will not change.
Credit cards: interest rates charged on credit cards – typically in the region of 20% APR – are much higher than base rate and are largely unaffected by any changes to it.
Loans: interest on personal loans tends to be fixed at the outset, so the base rate cut will not result in lower monthly repayments.
Overdrafts: new rules mean a standard rate of 40% APR will be charged on all overdrafts – although rules may slightly differ for those affected by coronavirus – regardless of the base rate.
How will the current situation affect my credit score?
So long as any payment holiday, payment reduction or any other forbearance has been agreed, your credit score will not be affected.
However, if you cancel a direct debit, stop making payments or do not have adequate funds to cover your payment without an official agreement, standard rules apply, and your score could be negatively impacted.
This is also likely to be the case if you’ve come to the end of an agreed spell of forbearance but then require longer-term help such as a debt repayment plan.
Keep the following guidance in mind when it comes to protecting your credit score.
- Always try to make at least your minimum monthly repayments
- Avoid taking out any further lines of credit if you can
- Make sure any payment holiday has been officially agreed with your lender
- Stay in touch with your lender if you are still struggling
Can I access my savings if they’re locked away?
If your savings are locked in a fixed rate savings account, many providers are waiving the penalty charge to access the cash before the agreed term comes to an end. Check directly with your savings provider.
However, bear in mind that with the recent drop in interest rates, returns may not be as favourable if you are looking for a fixed rate savings account in the future.
If you are struggling to meet the cost of your premiums on any kind of insurance policy – including travel, life and car, your insurer must support you.
This could take the form of temporary reduction in cover or a change of policy where appropriate – which results in cheaper premiums or a partial refund of an annual premium you’ve already paid.
If you can’t come to an arrangement with your insurer, you can request a payment deferral of between one and three months – in some cases longer. You will need to contact your insurer direct and ask for the support before 18 August when it will be reviewed again by regulator, the FCA.
Here are some common questions on car insurance specifically.
Can I cancel my policy if I’m not using my car?
Unless you officially register your vehicle off road by applying for a SORN, the law states you need valid car insurance. This means you will not be able to ‘suspend’ your policy just because you are not using your car.
If you do decide to declare your car as SORN because of coronavirus and want to cancel your insurance policy some providers are waiving the cancellation fee.
What if I can’t afford my car insurance payments?
Ask your car insurer for help if you are struggling to make payments. Help could include a temporary reduction in cover – from fully comprehensive to third party, fire and theft for example – which reduces your monthly premiums or triggers a partial refund if you’ve paid for the year upfront. You can also request a payment deferral of between one and three months – in some cases longer.
There are other measures you could take yourself, too. For example, if your car insurance premium is due and you usually pay annually, consider switching to monthly direct debit. While this can work out more expensive, it could ease cash flow problems in the short term.
I’m now returning to work but driving instead of getting public transport. Is my car insurance still valid?
Your insurance policy is still valid – and you do not need to contact your insurer to update your documents or extend your cover.
What’s going on with MOTs?
You will be able to defer MOTs that are scheduled for between 30 March and 31 July for a period of six months. However, this is provided your car is legally roadworthy. You can make your own simple checks on your vehicle as we explain in this guide.
For more information, head to our car insurance and coronavirus guide.
Can I still buy travel insurance?
Travel insurance is available – all providers on MoneySuperMarket’s panel offer emergency medical treatment and repatriation as a result of coronavirus as a minimum.
The Foreign & Commonwealth Office (FCO) warning against all but essential travel has been lifted for some countries, including many popular European holiday destinations, effective 4 July.
From 10 July, travellers arriving in England from more than 50 countries including Spain, France, Italy and Germany will no longer need to quarantine. You can find the full list here.
FCO advice against all but essential travel remains in place for countries not on the exemption list.
For more information, head to our coronavirus advice for travellers.
Is my current home insurance still valid?
You will not need to update your home insurer even if you have been at home 24/7 during lockdown. For more information, head to our home insurance and coronavirus guide.
Can I buy wedding insurance?
Wedding insurance has been completely suspended for the time being.
Can I buy unemployment insurance?
Unemployment cover is not currently being offered.
Is business insurance still available?
How will the new Green Homes Grant scheme help?
Homeowners and landlords in England can apply for vouchers to make their properties more energy efficient and save on bills.
Vouchers will be able to fund green improvements such as eco-friendly boilers and loft, wall and floor insulation.
The scheme will cover two-thirds of costs up to £5,000 per household, with those on low incomes being able to claim for the full amount of the work up to £10,000.
It will open in September and property owners will be able to apply online. Once a quote for home improvement works is provided, the government will issue the voucher.
How will the stamp duty holiday affect me?
The threshold to which stamp duty kicks in has been raised with immediate effect from £125,000 to £500,000 until 31 March 2021.
Stamp duty is a tax we pay when we buy a property and works on a sliding scale – the more expensive the home, the higher the percentage of stamp duty owed.
The raised threshold only applies in England and Northern Ireland and the government estimates that it will lead to nearly nine out of every 10 people getting on or moving up the ladder paying no stamp duty at all.
It is designed to help increase confidence with buyers, sellers and those prepared to invest in property. The stamp duty holiday does not apply in Scotland or Wales.
To learn more about stamp duty read MoneySuperMarket’s guide.
Can my landlord evict me if I can’t pay rent?
If you are renting in England and Wales, your landlord will not be able to evict you until 23 August, even if you have not been able to pay your rent. You will also be protected by a three-month notice period for evictions which lasts until the end of September.
If you are renting in Scotland, your landlord will need to give six months' notice before starting an eviction. And in Northern Ireland, it's 12 weeks' notice.
If you are still struggling after that point, your landlord will be required to work with you to draw up a payment plan.
Note that landlords with buy-to-let mortgages also qualify for the three-month payment holiday. And while there is no legal obligation to pass on the cost saving to the tenant, there is a strong moral one – tenants who are struggling financially due to coronavirus have a strong case.
The housing charity Shelter has more information on renting and coronavirus here.
Can I get help if I can’t afford my bills?
The major broadband and mobile service providers have agreed a set of temporary measures to offer fair help and support if you’re worried about paying.
They are also removing data allowance caps on fixed broadband services and releasing generous temporary packages for mobile customers. They will offer alternatives if priority repairs to fixed broadband and landlines cannot be carried out.
Is switching broadband still possible?
Yes, although there may be a delay if you are a Virgin Media or cable customer and require a BT engineer to visit to make the switch.
Otherwise, networks are saying they have the capacity to conduct switches as normal – including upgrading to a faster package.
Switching should take two hours, though in some cases it can be longer.
How does the new ‘Eat Out to Help Out’ discount scheme work?
The scheme gives diners a 50% reduction on their bill for sit-down meals in cafes, restaurants and pubs across the UK from Monday to Wednesday every week throughout August 2020.
Every diner will be entitled to a 50% discount of up to £10 per head on their orders at any participating outlet and it can be used unlimited times.
Firms wishing to participate in the scheme will need to apply to the government.
How will I benefit from the cut in VAT?
The government estimates that cutting VAT on most tourism and hospitality-related activities, such as food, accommodation and attractions, will save UK households around £160 per year on average.
The rate of VAT will be cut from 20% to 5% until 12 January, 2021.