Things to do if you are worried about your mortgage payments due to the financial impact of coronavirus
1. Seek information from your mortgage lender
If you are worried about your mortgage, it’s a good idea to seek information about your mortgage options as soon as possible.
Banks understand that the financial impact of coronavirus is being felt across the country and some customers are struggling with money at the moment. It’s a good idea in the first instance to review your options online, as banks are dealing with a much higher number of phone calls than usual. The earlier you take action, the more options your bank can give you.
This could include things like:
- changing your mortgage term
- switching the interest rate of your mortgage
- applying for a Payment Holiday
If you hold a Lloyds Bank mortgage, you can find out more information about your options here.
2. Review your budget
If you’re worried about paying your mortgage, it’s useful to review your budget. You might be able to make savings on some things you spend money on, which can then help pay your mortgage.
If you can’t make the full mortgage payment, it would be good if you can make part of the payment. The more you pay, the more options your bank will be able to give you.
First, work out your income. Include any monthly income from employment, benefits, tax credits, pensions, maintenance and any other income. Add these together to get your total income.
Next, write down your total expenses - everything that you need to spend money on each month. This includes mortgage, utilities bills, other costs such as council tax, food, your phone bill, travelling expenses, money you spend on debt, like loans, credit cards and child care costs, for example. Make sure you include everything. Then add up all of these things.
Then, do a quick sum: your total income minus your total expenses. You will either have a surplus or not enough money to pay all of your expenses. If you have a surplus, you can plan what you want to spend it on. That might include saving some of it.
To help, you can use the free Lloyds Bank online budget calculator.
You may not have enough money to pay all of your expenses. To begin with, look at your expenses to see if there are any you can cut or reduce. If you still don’t have enough money to pay your expenses, it’s best to get debt advice. You can get free expert, debt advice from Mental Health and Money Advice.
3. Apply for a payment holiday
Banks have agreed with the government to give homeowners a 3-month mortgage repayment holiday during the coronavirus crisis and applications must be made through your lender.
Your bank must agree to give you a holiday of up to 3 months if you can’t pay your mortgage because of coronavirus – for example because you can’t go to work.
Applying for a payment holiday won’t affect your credit rating. However, it’s important to remember that during a payment holiday interest will continue to be charged and so the total amount of interest you pay over the term of the mortgage will increase
If you hold a Lloyds Bank mortgage and have been financially impacted by coronavirus, you can click to find out more about mortgage payments holidays. If you are behind with your Lloyds Bank mortgage payments please visit our coronavirus/financial difficulties page for more details on how we can support you.
You can also get more information from the Financial Conduct Authority.
4. Check to see if you have the best mortgage deal
You can check to see if you have the best mortgage deal for your circumstances. This is to make sure you are paying the smallest amount possible every month.
You can contact your bank or a mortgage broker about this. You can find mortgage brokers through the Financial Conduct Authority.
5. Apply for a Support for Mortgage interest (SMI) loan
If you’re worried about being able pay your mortgage, you may be able to apply for a Support for Mortgage Interest (SMI) loan. The loan helps you pay the interest payments on your mortgage, but doesn’t help you pay back the amount you borrowed. The loan is repayable with interest and administration charges added on top.
You can claim SMI if you live in a mortgaged property and claim certain benefits. Find out more information about SMI, including how to apply and eligibility from Mental Health and Money Advice.