Worried about money? With the furlough scheme winding down at the end of October and the job market being uncertain, you may be concerned about paying your mortgage or your rent. We look at the current situation and what you can do to protect yourself…

Chancellor Rishi Sunak announced on 15 September that the furlough scheme won’t be extended at the end of October. Prime Minister Boris Johnson described the scheme as keeping workers in ‘suspended animation’ and the Bank of England has said that people should not be kept in unproductive jobs.

However, the Chancellor has said that the Treasury is looking at new measures to combat unemployment and help people get back to work. He said that keeping people out of work is not the answer. Since March, nearly 10 million people have been on the furlough scheme.

Unemployment figures

The Office for National Statistics figures shows that unemployment has risen to 4.1 per cent in three months. Numbers currently show that 695,000 people have been out of work since March, with those aged between 16 to 24 hardest hit.

When the scheme ends, the government has said it will offer firms £1000 for every furloughed worker kept on until the end of January. It will also offer £1500 to firms for every 16-24-year-old given a ‘high quality’ six-month work placement. And it will give firms £2000 for every under-25 apprentice employed until the end of January, or £1500 for over 25s.

Approximately two million homeowners have taken out mortgage payment holidays since the start of the pandemic. Financial regulator the Financial Conduct Authority (FCA) is proposing additional support for borrowers after their payment holidays have ended. Banks will be expected to provide individual support to those still suffering financial difficulties. The FCA says banks should offer short and long-term support options to customers. Guidance from the FCA urges lenders not to start repossession proceedings unless the customer agrees it’s in their best interests. Repossessions may not take place until 31 October.

Mortgage payment holidays

If you are concerned about money and are struggling to pay your mortgage, it’s not too late to apply for a mortgage payment holiday. You have until 31 October to apply. If you are already on a mortgage payment holiday due to the pandemic, you might be able to extend it by a further three months.

Payment holidays are available to homeowners worried about their ability to pay their mortgage due to a loss of work. They may also be permitted if you have a change of circumstance that has affected your ability to pay your mortgage. Lenders should not charge additional fees to set up a payment holiday and you should get a quick decision. You should not be asked to prove your situation. However, it’s important to know that you will have to pay back any unpaid interest.

Term of your mortgage

Extending the duration of your mortgage means your monthly repayments may increase slightly in the longer term. You will be paying your mortgage back over a longer timeframe, so you will incur more interest. Your lender should explain this and the impact of taking a mortgage break when you apply.

If you are already behind on your mortgage payments, you should still be able to apply for a payment holiday if appropriate.

If you are renting and worried about your ability to pay your rent, speak to your landlord to see if you can negotiate a late payment arrangement. You might even be able to negotiate a rental reduction. The charity Shelter has a template letter tool to help you. There has been a ban on evictions, but this ended on 20 September. The best way to deal with the situation is to appeal to your landlord to be flexible.

You may also be able to apply for benefits, including universal credit. Find more information on what to do if you’re struggling to pay rent or bills such as council tax, energy bills and loans from Citizens Advice. You might be able to claim benefits if you have coronavirus or are following guidance to stay at home, you’ve lost your job, are self-employed and get work or you can’t work because your place of work has closed.

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