20/03/2020

Coronavirus: Help for homeowners in Scotland

20/03/2020

Coronavirus: Help for homeowners in Scotland

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As COVID-19 (coronavirus) sweeps the nation concerns about how the virus will affect everyday life continue to grow.

Of course, initial fears surround health and wellbeing but as the government calls for self-isolation there worries about financial stability increase.

As people across Scotland face the prospect of reduced working hours, redundancy or are unable to work due to childcare constraints there is a real fear amongst families that they may not be able to cover the cost of daily life.

What does coronavirus mean for homeowners?

For homeowners, there is a genuine worry about being able to continue to make mortgage payments and a fear of losing their home.

A mortgage is a secured loan which means in normal circumstances not paying could result in the property being repossessed.

However, on Wednesday (March 18) Chancellor Rishi Sunak announced a raft of extraordinary measures for people in financial difficulty due to the coronavirus outbreak – including a three-month mortgage break throughout the crisis.

This means that households facing financial struggles will have the opportunity to apply for a payment break from their mortgage.

A number of banks had already announced support before the Chancellor’s announcement; however, the new rules mean that banks will have to allow it in a bid to help those most in need.

Here we shine a light on the support that has been made available to Scottish homeowners during the coronavirus crisis and offer advice about the best way to manage mortgage repayments during such an uncertain time.

What is a mortgage payment break?

It really is exactly how it sounds – a mortgage break offers the chance to defer payments for a period of time. This means you will not pay for a set time agreed by yourself and the provider.

It’s important to note, however, that these payments don’t simply vanish. They are added to the end of your contract, or, you can arrange a repayment plan with your provider once your situation improves.

You should also note that interest will be added during the period you don’t pay and will be included in future repayments.

How can I apply for a mortgage break?

If you are affected by the virus it’s important you speak to your mortgage provider to ensure you receive the best support possible.

Although banks are offering breathing space to clients this isn’t automatically put in place for everyone.

If you require a break in payment, it’s important you speak to your mortgage provider as soon as possible. Breaks are granted on a case by case basis and an advisor will speak to you about your situation to ensure you receive tailored support suited to your current circumstances.

However, there is a universal understanding across the mortgage and banking industry that support is required for Scottish people during these uncertain times. That’s why lenders are taking a more relaxed view of applications for payment breaks and allowing Scots who are up to date with their mortgage to self-certify for help if they are affected by the coronavirus.

Will my credit rating be affected?

As long as you make your mortgage provider aware of your situation as soon as possible, applying for a payment break shouldn’t impact your credit rating. You should speak to your lender and explain you have been affected by the coronavirus and require additional support.

If you don’t keep your mortgage provider in the loop regarding your circumstances and fall into arrears your failure to pay will be reported to credit reference agencies and could have a negative impact on your credit score.

What support is being offered by banks?

Scots can make the most of tailored support for major banks and lenders during the coronavirus outbreak.

RBS and NatWest are offering three-month payment breaks and waiving early closure charges on savings accounts and refunds on any cash advance fees.

Bank of Scotland has stopped fees for missed payments on credit cards, loans, and mortgages for anyone affected by the virus as well as offering payment breaks on both mortgages and loans with additional support in place if required.

Meanwhile, Santander is deferring or reducing upcoming payments and First Direct is offering clients the chance to make the most of a mortgage extension scheme to allow Scots the chance to extend the remaining term of their mortgage or switch their rate.

Scottish people who bank with Barclays should be aware the bank has removed penalty charges for accessing fixed savings accounts early

However, the most important thing to remember is if you’re struggling because of coronavirus you should speak to your mortgage provider as soon as possible to access support. It’s also vital to remember you are not the only one in this situation and not to be afraid to ask for additional help.

 If you’re struggling with your finances and debts during the coronavirus outbreak, talk to Carrington Dean. Our expert advisors are taking this situation seriously and are on hand to provide dedicated advice and support. Simply call 0808 253 1158.

You could write off up to 75% of unsecured debt with our debt assistant.

Get free advice

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