Whilst delivering protection to the NHS is the government’s primary focus, there is also a whole raft of multi-billion pound packages to help support the economy and people’s income stream and job security:
1. Salaried (PAYE) workers The Coronavirus Job Retention Scheme guarantees 80% of the salary of eligible workers, up to a ceiling of £2,500/month. See below for more.
2. Self-Employed workers A similar set-up for those eligible, with 80% of the self-employed workers’ average earnings over the last three years (if applicable), up to a maximum of £2,500 each month. See below for more.
3. Mortgage payers The reduction in the Base Rate to 0.1% should benefit the mortgage deals on offer. However, a sizeable number of higher Loan-to-Value deals have been pulled, partly due to the increased workload faced by lenders. This increased workload relates, to some extent, to supporting customers who are experiencing issues with their finances due to COVID-19, including payment holidays of up to 3 months. See below for more.
4. Those off work All of those advised to self-isolate – or caring for those self-isolating – will be entitled (if eligible) to Statutory Sick Pay (SSP). For those who cannot claim SSP (such as the self-employed), there will be alternative comparable support through the welfare system. Additionally, the normal welfare options are in place, if unemployed.
5. Businesses The recent Budget introduced a number of initiatives, such as the £30bn of support to stimulate the economy and help counter the impact of coronavirus. And following the Budget, the Chancellor announced that he would make available a further initial £330bn of government-backed loans to assist firms of all sizes through this period. Recognising the impact on many small and medium-sized businesses, assistance will also be delivered in areas such as reclaiming Statutory Sick Pay (SSP), business rates help, possible grants, more time to pay tax, and deferring VAT payments. Further information about the support offered (along with the other initiatives mentioned here) can generally be found at www.gov.uk (then search for covid-19).
80% of Salary - Coronavirus Job Retention Scheme Under this scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off. It would be applicable to those designated as ‘furloughed workers’ (people absent temporarily from work), and the HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. This would run for an initial 3-month period, and possibly longer. HMRC are working urgently to set up a system for reimbursement. This will hopefully keep a sizeable part of the workforce in their jobs and deliver an income stream for them through this difficult period.
Mortgage payment holiday Mortgage lenders have agreed to support customers (including buy-to-let borrowers) who are experiencing issues with their finances due to COVID-19, including payment holidays of up to 3 months. Whilst this may deliver much-needed financial help, do give consideration if this is the most suitable route forward for you. Firstly, it’s not waiving the money that’s owed, as that’s simply added to the overall outstanding amount, so you may be paying more for your mortgage in the long run. Second, you need to agree this with your mortgage lender, so you can’t just stop making payments, as that might also impact on your credit rating. Finally, there may be other options to consider (if on offer), such as extending the length of the mortgage term to help reduce the immediate monthly payments (again, this would increase the overall cost of the mortgage). You may be able to pay a lower amount each month, or even switch to just paying the interest for a defined period (where the capital amount that’s outstanding would remain the same). If you do want to proceed, then you may need to be patient, as the lenders have been inundated with applications and calls.
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You may not require government support, instead you could be keen to take advantage of the excellent mortgage deals currently on offer.
We’d currently expect more interest in remortgaging your existing property (and product transfers), than funding property moves. That said, the marketplace will, no doubt, be looking at innovative ways of how to make that supply chain work, in light of the need for social distancing.
Don’t forget Protection cover. In these challenging times – whether you’re still living at home, renting, or a homeowner – you’ll also recognise the importance of having insurance cover in place to protect your life and/or loss of an income stream. With so many issues to consider, and ongoing developments, it makes sense to see how we can help. You may have to pay an early repayment charge to your existing lender if you remortgage. As with all insurance policies, terms, conditions and exclusions will apply.