OCTOBER is set to be a month of big changes for many people’s finances as coronavirus support starts to wind down.
From the furlough scheme and payment holidays ending, to new payments for self-isolating – here’s everything you need to know about what’s changing.
- Furlough ending
More than 9million people have been furloughed at some point during the coronavirus pandemic.
And on 31 October the scheme which has covered 80% of wages up to £2,500 each month will come to an end.
The Coronavirus Job Retention Scheme (CJSR) as it’s officially known was first announced in March and has undergone some changes since then.
That includes people being able to return to work part-time, a reduction to the slice of wages the government covers and an increase in how much employers pay as it has wound down.
A new scheme has been announced to replace the furlough scheme from 1 November, but it is stricter and unlikely to support as many people.
The Job Support Scheme will pay some of the wages of those able to work at least a third of their usual hours, with the government and the employer paying some of the hours not worked.
Sadly many workers are facing redundancy when furlough ends, but there are some important things to check if you face losing your job so you don’t miss out on money you’re owed.
2. Debt repayment holidays ending
People with loans, credit cards and other types of credit were offered the opportunity to take payment breaks to ease the pressure on their finances caused by coronavirus.
Banks and lenders were told by the financial regulator to make these payment holidays available for three months initially and then a further three months on top.
That includes:
- credit cards
- car finance
- personal loans
- stores and catalogue cards
- buy-now-pay-later schemes
- rent-to-own policies
- payday loans
Many people have taken advantage of this, essentially pausing the money they have to pay back (though interest still builds up).
But this specific support won’t be extended any further and you have until 31 October if you want to apply.
After this, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank, lender or provider as soon as possible.
The help available will be tailored to individuals and may still include a payment break and other help, but it will not be the kind of blanket-wide approach offered before.
Anyone who has already taken a break will continue to pause payments for the period of time already agreed.
For example, someone who started a three-month payment break on 1 September would continue through to 1 December.
For anyone who taken a break and is still struggling when repayments start again, there are new rules for support and lenders must consider suspending, reducing, waiving or cancelling any interest, fees or charges to prevent the debts getting out of control.
Any new help you get from 1 November onwards can affect your credit score, whereas lenders had agreed that the support for borrowers before 31 October would not impact credit scores.
The bank should help you understand how any support you get can affect your credit file.
Remember, any breaks from payment must always be agreed with your lender – never just stop paying.
3. The end of interest-free overdrafts
Interest-free overdrafts of up to £500 have been made available to those who need it during the pandemic.
The deadline for asking for a three-month interest-free overdraft is 31 October.
Some banks offered an interest-free overdraft automatically during the pandemic – you didn’t end to request it – but these have now ended.
But you can still request one before the 31 October if you’re struggling.
And if you’ve already had an interest-free overdraft for three months, you can ask for a further three-month interest-free period before 31 October.
To find out more about how we can assist you with your Second Charge Mortgage please click here
Anyone who has had this support will be contacted by their bank to see if they need further help.
After 31 October, banks will still offer help, but this will be on a case-by-case basis.
This tailored support could include reducing or waiving interest, agreeing a programme of staged reductions in the overdraft limit, or support to reduce overdraft usage by transferring the debt.
Any new help you get from 1 November onwards can affect your credit file and your bank must explain this to you, whereas support before 31 October does not impact credit scores.
4. The end of mortgage payment holidays
Homeowners have been able to take a break from repaying their mortgage if their finances have been impacted by the pandemic.
More than a million people have already taken a break and anyone who hasn’t already done so has until 31 October to apply for one if they need it.
Those who have already taken a break can also still apply for a second pause before 31 October.
The break is temporary and interest still builds up which can mean you pay back more in the long term, the length of the loan can be longer or repayments higher when you start paying them back.
These payment holidays will not have a negative affect on your credit file.
After 31 October, there will still be help available and anyone experiencing financial difficulty is urged to get in touch with their bank or lender as soon as possible.
The help available will be tailored to individuals and may still include a payment break and other help, but it will not be the kind of blanket-wide approach offered before.
Support after this date may appear on your credit file but the bank should explain to you if that’s the case and what it means for you.
Mortgage lenders should get in touch with you when your payment holiday is coming to an end to explain what your options are.
Remember, any breaks from mortgage payment must always be agreed with your lender – never just stop paying.
5. Repossessions to start again
Home repossessions have been halted throughout the pandemic to prevent people from losing their homes.
From 31 October they can start again and whatever stage the repossession was at, it can continue from there after this date.
Anyone in arrears should get in touch with their bank and they may also be able to take advantage of the mortgage payment support outlined above.
Get in touch with Shelter for free advice if you’re worried about your home being repossessed.
- Insurance payment breaks ending
Insurance customers have been able to take a break from paying their premiums if they’ve been financially affected by coronavirus.
There has also been other help on offer, such as reassessing customers’ risk profiles and tweaking policies to reduce premiums and waiving fees for any changes or cancellations.
Payment deferrals of between one and three months are available until 31 October.
This help will come to an end and from 1 November anyone struggling financially should contact their insurer directly to see what help may be available.
- New £500 quarantine payment
Millions of families on low incomes in England will be paid up to £500 if they have to quarantine to stop the spread of the coronavirus.
Just fewer than 4million people on benefits in England will be eligible to the extra payment if they’re told to self-isolate, according to the government.
You will be eligible to claim the payment if you work full-time, part-time, self-employed or unemployed and you receive one of the following benefits:
- Universal Credit
- Working tax credits
- ESA
- JSA
- Income support
- Pension credit
- Housing benefit
The payments are only available to those who can’t work from home and will lose income as a result and you will only get the payment if you have been asked by the official NHS Test and Trace team to self-isolate.
If you decide you have to quarantine because you are displaying symptoms, then you won’t be eligible for the funds, even though you’re following the guidance.
The payments will be available to anyone who has to self-isolate from 28 September onwards, but you’ll need to wait until your period of self-isolation is over before making a claim.
They will be managed by local authorities, like a payment scheme trialled in Oldham, Blackburn and Pendal, but the system isn’t expected to be running until 12 October.
Anyone who falls ill after the scheme launches but before the system is running will receive a backdated payment.
Find out more about the £500 quarantine payment here.
- State pension age increasing
From 6 October the state pension age will be 66 for both men and women.
The minimum age for claiming the state support in old age was 65 but that has been increasing over the past few years to reach 66 this month.
And historically the age has been different for men and women but that has been equalised over several years.
So anyone retiring from 6 October 2020 onwards will have to wait until 66 at least (thought the age for accessing a personal pension is 55).
There are further changes ahead though, with plans to increase the state pension age to 67 between 2026 and 2028 and then to 68 between 2004 and 2046.
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Homeowners will be given £5,000 in energy saving vouchers to help them insulate their homes – and you can apply now.
By Lynsey Barber
Source: The Sun