Mortgages – cheaper rates, and three-month payment holidays if needed
Mortgages are getting cheaper
Exactly what happens as a result of the base rate cut depends on what type of mortgage you have:
- Tracker mortgages: Here you'll get the full 0.65 percentage-point base-rate cut (from the two cuts combined), worth roughly £40/month per £100,000 of mortgage outstanding. Use the money saving Mortgage Calculator to see exact savings.
- Variable-rate mortgages: Here you should definitely see a cut, usually by the full 0.65 percentage points. See the Money Market lender-by-lender rate cuts table for amounts and timings.
- Fixed-rate mortgages: If you're on a fix, as the name suggests, your rate won't change during the fixed period.
Three-month mortgage payment holidays are available for those who are struggling
If keeping up with your bills and food on the table may be a challenge, speak to your bank. On Tuesday 17 March, banks agreed with the Chancellor that they will offer 'forbearance' (tolerance and help) on mortgages.
This means they all should offer those struggling a three-month 'holiday', allowing customers a temporary break from having to make mortgage payments during this time. (Though it's worth noting this is a voluntary agreement with banks – it isn't compulsory for them to offer mortgage holidays.)
How would this work in practice? We await final confirmation, but here’s how it typically works. Let's imagine you have 19 years and three months left on your mortgage. For the next three months you wouldn't pay anything. Then when your mortgage repayments resume, the total you owe would be spread over the following 19 years – so you would see a very small uplift in future payments.
You will still be charged interest - but it's added to the total cost and you get short-term respite. It's worth noting that if you take a mortgage holiday you WILL still be charged interest for the time you're not making payments. But you won't have to pay it back immediately - it'll be added on to the total cost of your mortgage and factored into repayments when you start making them again.
The Government has also now announced that landlords won't be able to start eviction proceedings for at least the next three months, protecting private and social tenants (and private landlords can be given a three-month payment holiday on their buy-to-let mortgages if their tenants are experiencing financial difficulties due to coronavirus). (It's worth noting though that this change won't affect eviction proceedings already underway.)
Beyond this three-month point, you'll be expected to work with your landlord to establish an affordable repayment plan which takes your circumstances into account. If you live in Scotland, your landlord will only be able to start proceedings to evict you if you've been in arrears for six months in a row (up from three months currently)
The Government has also said that existing protocols for social landlords dealing with rent arrears will be extended to include private landlords too, to "support engagement" between landlords and tenants and help them solve disputes. It will ask landlords to be compassionate and allow tenants to stay in their homes wherever possible – while associations representing local government and housing associations have already said that no social renter should be evicted due to coronavirus.
The Government has announced nearly £1billion of additional support for renters, through increase in the generosity of housing benefit and universal credit. From April, Local Housing Allowance rates will be pay for at latest 30% of the market rate in each area.
Vale Council Tenants
The Vale of Glamorgan Council is committed to supporting it tenants during this difficult time. They are working very hard to ensure they will still be able to deliver our most important services.
Rent is still due to the Council if you have a council tenancy. However, if your income has stopped please get in touch with their Money Advice Team who can talk you through the support available.
Their Money Advisors can be contacted during office hours on the following numbers:
- Mark: 07739194963
- Lisa: 07739194956
- Charlotte: 07739194962