by Derin Clark
Facing redundancy is difficult at the best of times, but during the current economic climate of uncertainty and job scarcity, it is even more challenging. For those in this situation, a priority concern will be how to meet everyday living costs and continue mortgage and debt repayments.
Fortunately, there is financial help available and below we’ve outlined some of the options available if you are facing redundancy.
If you are a homeowner facing redundancy, you will likely be concerned about how to keep up with mortgage repayments once you no longer have your full income each month. Although it is a highly stressful situation, there are some options available to homeowners.
For those on their lender’s standard variable rate or who are coming to the end of a mortgage term, speaking to a mortgage broker to see if you can lock into a new remortgage deal at a lower rate could help. If this is not possible, or is still too high, you can contact your mortgage lender directly to discuss other options, such as switching to interest-only repayments for a period.
Applications for a mortgage repayment holiday ended on the 31 October 2020, which means lenders may now be more restrictive about who they will accept for a repayment holiday. Saying this, if you are struggling to make mortgage repayments, your mortgage lender should still assess your individual situation and may still allow you to have a mortgage holiday, but you should be aware that if one is taken out now it will have an impact on your credit score.
As well as this, any changes to mortgage repayments, such as switching to interest-only repayments or taking a repayment holiday, will result in either having to make higher mortgage repayments when you go back to paying off your mortgage as normal or will involve extending the term of your mortgage.
Credit card and loan repayments
As with mortgage repayment holidays, after the 31 October 2020 lenders are no longer obliged to accept repayment holidays on credit cards and loans as before, but are still required to offer more tailored support to customers. Again, if you will struggle to make credit card or loan repayments due to redundancy, it is important to not miss payments and instead contact your lender directly to discuss options.
They may be willing to allow a repayment holiday, although this will now impact your credit score, or they could suggest a lower repayment amount until you are financially able to start making full repayments again. If you are struggling with debt, it is vital that you speak to either Citizens Advice or a free debt charity as soon as possible for advice and support.
Financial help available
Depending on your age and for how long you have been working for your employer, you may be entitled to a redundancy payout. More information about this can be found on the Moneyfacts.co.uk website. You could also be entitled to Government benefits and financial help such as Universal Credit, so you should visit the Government website or contact Citizens Advice to find out what financial help you can get.
For those lucky enough to have savings to fall back on, ensuring you can get quick access to your money is important. Although easy access savings rates are low, it may be worthwhile moving savings held in notice accounts as quickly as possible, as these accounts require a notice period before withdrawing funds.
Money held in a National Savings and Investments (NS&I) premium bond may take a couple of weeks to withdraw, especially if you request this by post, so again, moving funds to an easy access account may be a good option. If your money is locked into a fixed rate bond, there may be the option of withdrawing funds early, but this will likely come with an early withdrawal interest-loss penalty.
For more information on all areas of personal finance, visit Moneyfacts.co.uk