Lloyds Banking Group – which includes Bank of Scotland and Halifax – is just one lending organisation that’s offering to help ease financial pressure on customers impacted by the recent coronavirus (Covid-19). Mortgage payment holidays are the most talked about measure, but there’s a host of other measures for renters and credit card customers too. Worries over debt repayments are understandably widespread, as the virus continues to damage not just the health of workers across the UK but businesses and share prices overall.
This guide details which banks are providing relief for their customers affected by the illness, and exactly what benefits they can receive at the time of writing.
If any of the below support options apply to you, it’s best to contact the relevant bank directly to ensure you are eligible. Almost all of the offers will be dependent on your personal circumstances so just because a bank is offering relief, it is not itself a guarantee that you’ll definitely qualify.
Exactly how long these supportive measures are expected to last hasn’t been confirmed, as it will likely depend on the specific offer, and could easily change as the public health situation progresses.
As these solutions are responsive to a public health issue, the applications may be fast-tracked for affected individuals.
Mortgage Payment Holidays
On 17 March, the Chancellor agreed with UK banks for a countrywide ‘forbearance’ on mortgage repayments. The Lloyds Banking Group, The Royal Bank of Scotland Group, Nationwide Building Society, and other mainstream UK mortgage providers are offering mortgage repayment holidays for up to three months to customers affected by coronavirus.
A mortgage payment holiday lets you defer your payments for a specified period of time – in this case, three months. This support is designed to relieve the stress and burden of pressing mortgage payments for customers unable to work or have seen reduced income due to the coronavirus.
Mortgage payment holidays have always been available, but whether or not you would qualify for one depended on your current financial status, the mortgage lender’s criteria, and the health of your Credit Report. This temporary measure makes mortgage payment relief more easily accessible and sets the duration of the holiday to three months, whereas usually the length of the holiday would vary on a case by case basis.
Is there a downside to Mortgage Payment Holidays?
While the recent announcement of mortgage relief has gone widely appreciated, it’s important to understand any potential dangers of changing your current mortgage agreement.
Mortgage payment holidays do not mean that your mortgage is free for the duration of the holiday – instead, you are expected to repay the amount you avoided over your remaining mortgage term. Think of payment holidays as deferred payments, rather than no payments. You will still incur interest on your mortgage balance during a mortgage holiday. This means your outstanding mortgage balance and monthly repayments will likely be higher at the end of the holiday than they were at the beginning.
Mortgage payment holidays usually damage the health of your Credit Report and Score, but this is dependent on how the lender reports the information to the Credit Reference Agencies. Mortgage payment holidays may be reported with an Arrangement to Pay marker on your Credit Report, which reflects an agreement to pay an adjusted amount compared to what you agreed to in the mortgage terms. As the adjusted repayment figure in payment holidays is £0 a month, payment holidays are by definition Arrangements to Pay. Make no mistake, Arrangement to Pay markers are severe negative entries that can damage your Credit Score, even more so than late payments.
That said, there is talk of lenders not recording these payment holidays punitively on customer’s Credit Report. To check whether your particular lender has a policy whereby it doesn’t report mortgage payment holidays negatively, it is always best to contact them directly.
What other supportive measures are banks introducing?
While most mainstream mortgage lenders will be offering these three-month payment holidays, it won’t soften the worry of renters and other types of borrowers. In addition to mortgage payment holidays, banks have announced a varied set of support options and these are detailed below:
Lloyds, Bank of Scotland, and Halifax
Lloyds and its subsidiaries have one of the most thorough packages of support for personal customers hit by the coronavirus.
One of the most reassuring options offered by Lloyds, Bank of Scotland, and Halifax is that there won’t be any fees for missed payments on credit cards, loans, and mortgages. If you’re worried about your ability to keep on top of your accounts while ill or unable to work, you should gain some confidence knowing you won’t be smacked with a late fee.
If you qualify for this support, you won’t have to pay late payment charges, but it’s important to remember that payments not made on time can still be recorded on your Credit Report. Late payments are negative markers that can damage your Credit Score for six years, making it more difficult and expensive when taking out further credit.
Lloyds, Bank of Scotland, and Halifax are also granting emergency access to fixed-term savings accounts without charge.
Royal Bank of Scotland and NatWest
The Royal Bank of Scotland and NatWest are asking customers to contact their customer services to see if flexible, tailored relief can be granted based on the customer’s specific circumstances.
The banking group’s marketing hasn’t nailed down too many specifics that personal customers can benefit from, but credit card customers can apply to have late payment fees waived. Business customers can apply for deferred loan repayments and emergency loans with no fees. It’s unlikely that these will be shared with personal customers, but it’s certainly a change that could happen as the health situation develops.
Santander
Santander has, on the face of it, made relatively few policy changes for customers affected by the coronavirus.
Santander’s chatbot has seen an update, likely to alleviate pressure on phone staff, and additional call operatives have been drafted in. Dedicated phone support is available for customers looking for payment relief and, much like RBS, the options available to you will very likely depend on your situation.
Nationwide Building Society
Nationwide is supporting customers by offering increased credit card limits, fee-free access when withdrawing from a savings account, and even removal of interest rates from credit cards for a short period.
If you’re a Nationwide customer, you’ll want to contact its dedicated customer support to see what you’re eligible for.
HSBC
HSBC has a fairly extensive set of relief options for personal customers. Short term support is offered through waiving credit card late payment fees, while longer term solutions include extending the remaining term of your mortgage or switching it over to interest-only.
Like most other mainstream banks, HSBC is letting customers withdraw from fixed-rate savings accounts without incurring a charge. Temporary increases in credit card limits can also be given to creditworthy customers.
Additionally, HSBC says that much of its support will be tailored to their customers’ specific needs. If you’re a HSBC customer and are unsure how it can help you should you fall ill, it’s best to contact HSBC directly to see what you’re offered.
TSB
TSB is letting, not just its mortgage customers apply for a repayment holiday, but also its short term loan customers - for a period of two months. Credit card customers may be granted an emergency credit limit increase.
TSB’s measures should go some way in alleviating coronavirus related stress, but they don’t seem as comprehensive as the likes of Lloyds and HSBC. If you’re a TSB customer, as is true for all these lenders, it’s best to contact it directly so it can advise on your exact circumstances.
The Co-operative Bank
Just like Santander and RBS, The Co-operative is advising customers that coronavirus support will be tailored to their specific situation, so no blanket policies have been advertised on their site.
At time of writing, the support outlined above matches what the banks are offering in their official marketing. As always, if you have any doubt about whether you qualify for any of it, contact your bank directly so it can advise you on your particular situation.
The downsides of these supportive measures
The supportive measures offered by banks in the face of our public health concerns are mostly appreciated and go a long way in alleviating stress and pressure in an already difficult time. That said, they are not designed to erase your debt or to enable you to avoid payments on a routine or long term basis. These measures are supportive for customers unexpectedly struck with illness and who face subsequent financial difficulty due to the pandemic. There are some downsides to all the options we’ve outlined and it’s vitally important to remain informed about your finances and how any decisions you make affect you and your Credit Report.
While some banks are waiving late fees, the actual late payments themselves will still likely be recorded on your Credit Report, so your credit rating can suffer if any payments are not made on time. Late payments remain on your Credit Report for six years from date of account closure, so could easily impact you long after the illness.
Mortgage payment holidays are getting a lot of the attention but, as outlined already, there are potential downsides to going through with one. Extra interest, more expensive monthly payments, and higher mortgage balance after the holiday are the implications you could face and there’s also the possibility that your lender reports your mortgage payment holiday negatively to the Credit Reference Agencies, thereby damaging your Credit Report. How much of that matters in the short term in the face of such challenging circumstances will vary from person to person.
What else can I do?
It’s always a good habit to regularly monitor your Credit Report, and it’s especially true during times of financial difficulty. Whether a bank is comfortable increasing your credit limit, granting you a payment holiday, or changing your interest rate often depends on your personal situation and health of your Credit Report. Banks will naturally be more confident with changing the terms of agreement for creditworthy customers, as their Credit Report should hold evidence that presents them as reliable payers.
The only way to see what a lender sees when you apply is to check your Credit Report for yourself. As there are four UK Credit Reference Agencies, you actually have four Credit Reports – each one different.
checkmyfile streamlines this checking process, making it easy to monitor and compare your complete Credit Report across all Credit Reference Agencies: Equifax, Experian, TransUnion, and Crediva. You can check your Multi Agency Credit Report free for 30 days, and then just £14.99 per month afterwards. You can easily cancel online at any time, or by freephone or email.