As a direct result of the pandemic, people and families across Northern Ireland are seeing a reduction in income.
This means that every day can be a struggle when it comes to paying credit card bills, a mortgage and other commitments.
I’ve compiled some of the more common questions we’ve received to help people understand the options available to them.
If you are worried, the key is to speak to our advisers at Advice NI or your lender to see what measures can be put in place to support you.
What is a mortgage holiday?
You can take a break from paying your mortgage for up to six months. You need to contact your lender directly to request this and you can apply for it until March 2021.
Don’t cancel your current payments until you speak to your lender. You will only get a payment holiday if you are not in mortgage arrears and are up to date with your payments.
However, you need to seriously consider if this is appropriate for you. Taking a payment holiday will affect the amount you’ll repay when your payments begin again.
Your payments may increase substantially, and this may not be viable for you in the long-term.
Therefore, make sure you are fully aware of the terms and conditions before considering this option. If you can afford to pay a lower amount to the mortgage rather than taking a holiday, speak to the lender as this will bring down the long-term costs.
What happens if I can’t afford to pay my car?
Speak to your finance company as soon as possible. They might offer to extend the contract, which would lower your monthly payments, or come to another arrangement, such as delaying a balloon payment or have interest suspended.
A balloon payment is the lump sum paid at the end of a loan term that’s usually higher than monthly repayments.
You may be able to ask for a full or partial payment holiday (similar to the mortgage holiday) and it is important to understand how this will affect you once the holiday ends.
Will a payment holiday negatively impact my credit rating?
Credit reference heavyweights, Experian, Equifax and TransUnion have said that payment holidays taken as a result of coronavirus will not affect credit scores and this ‘emergency payment freeze’ will include mortgage payment holidays.
Your credit score will be maintained or frozen for the duration of the agreed holiday.
However, if you get into difficulty when payments resume this could affect your credit score. You can regularly review your credit score and if you spot something that concerns you, then speak to your lender and/or credit reference agency.
What can the lenders do?
The Financial Conduct Authority now require lenders to provide tailored support for you depending on your circumstances.
This could include a range of short and longer-term options, which would allow you reasonable time to repay and the lender may also consider suspending, reducing, waiving or cancelling any interest, fees or charges to prevent your debt from escalating (once a repayment plan is in place).
Belfast Live’s money expert Sinead Campbell is Head of Money, Debt and Quality at Advice NI, Northern Ireland’s largest, independent advice provider.
Advice NI and the Independent Advice Network have 69 members and more than 300 advisers across Northern Ireland, providing free and confidential advice to individuals and businesses.
To access Advice NI’s money and debt advice, and free your future, call 0800 915 4604 or visit here.
For overdrafts, this support could include, reducing or waiving interest, agreeing a plan of staged reductions in your overdraft limit and your balance, or supporting you to reduce your overdraft use by transferring the debt to an alternative credit product on more favourable terms.
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