MoneySavingExpert’s Martin Lewis has issued handy advice to anyone with a mortgage, credit card, car finance and more.
Writing in his weekly newsletter, Martin said anyone who is struggling financially can apply for a payment holiday.
However, this would need to be done before October 31.
Essentially, a payment holiday will mean you don’t need to make repayments on stuff like on mortgages, overdrafts, credit cards, personal loans, and car finance.
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The payment holiday will last for three months and is a handy way of taking pressure off your finances.
It’s been brought in following the coronavirus pandemic, which has seen thousands lose their jobs or be furloughed.
Speaking about payment holidays, Martin stressed “everyone should evaluate ASAP if they need one”, reports Liverpool Echo
How to get a payment holiday
If you apply for a payment holiday before October 31, it will last three months.
If your finances are impacted due to Covid-19, you can apply for a payment holiday which will mean you don’t need to make repayments.
If you apply by the end of this month, you’ll get three months almost automatically. Payment holidays are available on mortgages, overdrafts, credit cards, personal loans, insurance, car finance, buy-now-pay-later, rent-to-own and pawnbroker loans.
There’s also a month’s payment and interest holiday for payday loans.
If you’ve already had two three month holidays on a single product and apply for another on that same product, you’ll be put on to the post October 31 regime.
From November 1, there will be a one-size-fits-all payment holiday shift to “tailored support”, which will be dependent on your circumstances.
It could include payment holidays, reduced payments, lower interest or a different product and the help will go on credit files, likely having a more substantial impact on your ability to get future credit than the current help on offer.
What are the consequences?
Martin stresses that you should only take a payment holiday if you really need to.
Although it is better than missing payments, there are still consequences.
Obviously, interest racks up. The money guru said many people wrongly assume interest is frozen if you take a payment holiday but it’s not.
Interest continues to accrue and while you’re not repaying, it results in a higher balance and more interest will rack up.
A payment holiday can also impact your ability to get future credit. Currently, these specific Covid-19 payment holidays don’t go on your credit file but, as MoneySavingExpert.com revealed in May, lenders can factor them in to lending decisions after spotting it via application forms, Open Banking or your payment history.
But so far, once the payment holiday is over and you’ve made a few repayments, MSE.com has not seen too great an impact.
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