Handling the Covid-19 Crisis: A RIFT Guide to Staying Financially Healthy​

Housing

Mortgages and rent

The Bank of England's big move of slashing the UK's base interest rate to just 0.1% has sent an earthquake through the mortgage market. Obviously, if you're on a fixed-rate mortgage you won't be seeing any change, but variable rate and tracker agreements will react to the rate cut with a dip in the interest you're being charged. Depending on your mortgage, you could see as much as a 0.65% drop in your rate, which could be worth £40/month for every £100,000 you've got left to pay off.

If you don't yet have a mortgage, you're probably going to find the rates being charged on new deals dropping as well. Keep an eye out for what's on offer, and shop around until you find something that works for you.

For those already in mortgage trouble, you might be able to arrange a 3-month payment break. Obviously, taking a break will increase what you're paying each month after your payments resume (since you'll still have to pay off the full amount plus interest), but it could mean some valuable breathing space in the meantime. Alternatively, you might find yourself ending up with a longer term agreement to make up the missed payments. Either way, talk to your provider at the first sign you'll be struggling to see what help's available. Don't worry about messing up your credit rating, either. Since the payment breaks are pre-arranged, they shouldn't count against you.

You won't have to “prove” that the epidemic's the actual cause of your payment problems, and your lender might be able to suggest other options that better suit your situation. For instance, taking 3 months out of your payments might end up making the rest of your mortgage difficult to afford. Similarly, if you're already behind on your payments, a mortgage holiday might not be for you.

For people who rent, it's best not to wait until you're already in deep trouble before talking with your landlord. With a bit of luck and goodwill, you could arrange a more manageable payment plan. If you're getting benefits, it's been announced that Universal Credit and housing benefit are going up so that they cover at least 30% of the rents in your local area.

For those already in over their heads, it's being made tougher for landlords to evict tenants who are unable to pay during the COVID-19 crisis. Under the incoming rules, new eviction proceedings won't be able to start for another 3 months at least, but the actual mechanisms for this are still in the works.

Employee rights

Covering wages

In an unprecedented move, the government has committed to reimbursing 80% of UK businesses' wage bills for employees who would otherwise have been laid off because of the COVID-19 outbreak.

The details of this “Coronavirus Job Retention Scheme” are still being hashed out, but this move alone could save thousands of jobs, or throw a crucial lifeline to people who've already been sacked because of the pandemic.

If you’re already out of a job, that “Coronavirus Job Retention Scheme” we talked about above might get you back into employment. Failing that, it's essential that you understand exactly what your rights are and what benefits you might be entitled to. You can read up on redundancy here, and check here for information on benefits.

Money

Loans, credit cards and overdrafts

Of course, mortgages aren't the only kind of loan agreements people are worried about during the lockdown. While you won't be seeing any drop in your credit card interest rates after the Bank of England's rate change, some providers are starting to become slightly more flexible in their terms. Depending on which cards you have, you might be able to get emergency raises to your credit limits, repayment holidays or cancelled penalty fees if you miss a payment date. If you've got loans you're worried about paying off, it's definitely worth sending up a distress flare to your lender. You might find them willing to relax their rules a little, as long as you talk to them in advance.

While most banks have recently bumped their overdraft rates up to 40% after a change in the rules, the move actually results in most people paying less than they were before. People with unarranged overdrafts are getting the worst of it, though, with their fees skyrocketing in many cases. However, the ongoing crisis has got the banks reaching out to people with overdraft problems. Some are upping their interest-free limits, at least temporarily, while at least one has committed to ditching all charges for agreed overdrafts for a limited period. There are still some decisions being made by the banks here, so check with yours to see what help they can offer.

As of April 2020, some more help came from the Financial Conduct Authority (FCA) in the shape of a new set of rules designed to protect people during the COVID-19 crisis. Under these rules, borrowers are entitled to:

• Be charged no more than they would have paid before the recent overdraft rules changes came in.
• A freeze of up to 3 months on loan and credit card repayments.
• Keep their credit ratings undamaged if they have to use any of the temporary payment freezes on offer.

It’s important to remember that a payment freeze isn’t the same as getting free money. Even though you might be able to get a payment holiday, the debt you’ve run up will still be gathering interest as normal, meaning you’ll end up paying more overall. Depending on your situation, taking up the payment freeze offer might just mean storing up bigger problems down the road.

For people with overdrafts whose finances have taken a hit from the pandemic, there’s some more support on offer. If they already have an arranged overdraft on their main current account, up to £500 of it can be set to 0% interest for 3 months. As mentioned above, the overdraft rules were recently changed to ban daily fees, with most banks raising their overdraft rates to 40% in response. As a result, this move could be a big help to many people.

If you’ve already got a 0% credit card arrangement, it’s pretty common for a missed payment to see it killed off and interest charges kicking in. Under the new rules, though, you’ll be able to keep your 0% entitlement when you decide to take a payment holiday.

Of course, not every loan or credit arrangement is the same, and not all will be affected by these new protections. We’ve already had clarifications from the FCA that the rules cover home collected credit, logbook and guarantor loans, loans from community development finance institutions and certain credit unions, as long as they’re regulated. Payday loans, however, are exempt , as are various other short-term credit deals. The same goes for car finance plans, so watch out and be sure you know exactly where you stand.

Obviously, not everyone will be able to benefit automatically from the FCA’s decisions – and some banks may actually be doing more than the basic minimum they’re required to. In most cases, you’ll have to ask for help to get it, so the main thing to do is talk to your lender if you’re running into trouble. Once you get a clear picture of exactly what they can do to help, you’ll be in a much better position to make good decisions.

It’s expected that all these new rules will be in full effect by the 14^th of April. There are still some announcements on the way, though – including one specifically about car finance, so keep checking back for the latest updates.

Travel

Train ticket refunds

With most of the UK's travel plans on hold for the moment, there's good news for people who've already bought train tickets they now can't use. For one thing, TfL is dropping its £5 fee for travelcard refunds if you've bought one to load up your Oyster card and now can't use it because you've been told to self-isolate. You can also get a full refund on any advance, anytime and off-peak train tickets you've bought, and a partial refund on returns if you've only gone one way on them so far. Partial refunds are also on offer for people with season tickets, assuming there are at least 3 days left on them. For most of these refunds, you won't have to pay any kind of charge to get your money back. Check with your train operator to find out exactly where you stand.

Bills

Council tax

If your Council Tax bill's looking like a mountain to climb at the moment, there's a chance you might be able to sort out a payment holiday sorted out. If COVID-19 has affected your circumstances in ways that make paying up difficult there might be come support available, like a bill reduction or temporarily stopping any enforcement action against you. Different councils are trying different approaches, though, so it's a bit of a postcode lottery in terms of what help you'll get.

Scams

Scams and phishing

As always, whenever there's a big story taking over the national conversation, the scammers crawl out of the woodwork. Already, £1 million has been stolen through online shopping and other swindles since February, with no end in sight. These fraudsters prey on people's fears, claiming to offer things like hand sanitiser and face masks and ramping up prices because they're in such short supply. At best, you'll get nothing for your money. At worst, you've just handed the keys to your bank account to an opportunistic criminal.

Fake sellers aren't all you need to watch out for, either. Scammers are taking every chance they can to bombard people with “phishing” emails and text messages designed to get sensitive information out of you. As always, update your anti-malware programs, be sure who you're sending payment details to and never click on a link or open an attachment you're not 100% on. There's more to staying safe in a crisis than washing your hands.

HMRC warns taxpayers not to be taken in by scammers who email, text, or call, offering money from HMRC then ask for the business bank details to be confirmed.

HMRC says DO NOT click on a link in an email, or reply to a text, purporting to be from HMRC.

Stick with RIFT

Keeping up to date

We'll keep updating this page with more information as it becomes available. Check back often for the latest news and advice.