Taking a break from your mortgageAccording to UK Finance, the trade association for banks, mortgage lenders should offer “forbearance” to any customer who is in financial difficulty or unable to make their mortgage payments. This could take the form of an authorised payment holiday, where your lender gives you permission not to pay your mortgage for a short period, usually up to three months. Alternatively, with your lender’s permission, you may be allowed to reduce your monthly repayments.
It can be tempting to cut pension contributions when money gets tight but you are losing more than just your own contributionThese arrangements come at a cost. Any payment holiday will be noted on your credit record, which could have implications the next time you want to borrow money – you may, for example, be charged a higher interest rate. You will also be expected to pay back everything you have missed paying once you are no longer in financial difficulty. Your mortgage is likely to cost you significantly more in the long run.
Cancelling life insurance premiumsLV= allows this – but you can only benefit if your policy (for income protection, critical illness or life insurance) has been in force for a year or more, you have a good history of paying and are less than three months behind with monthly premiums. You must declare that you have suffered a significant drop in your income or that your usual earnings have stopped. The payment break will only be offered for a month at a time, for up to three months.
If you do find yourself in a position where you have to cut or stop your contributions, try to resume them as soon as you can.For example, it says a 33-year-old with £250,000 of life cover, paying £21.86 a month, could reduce their payments to £4.17 a month for six months. However, the maximum that could be claimed during this six-month period would be only £10,000.