Coronavirus impact on ability to pay mortgage?

loveka

I am looking at a worst case scenario here, hopefully it wouldn't come to this.

Would mortgage companies put special measures in place to help people?
I run a small business which potentially could be severely impacted.

Whilst I had 2 years worth of basic living expenses in savings this is in stocks and shares and has taken a huge hit. I have just put a huge investment into the business which took the savings I had in my savings account.

They have just said we are looking at a 4-6 month period potentially.  It could be that my business is effectively closed for a good portion of that time.

I totally accept that nobody knows what will happen, but are financial institutions likely to relax their rules?

Thanks.

Thrugelmir

People suffer from periods of illness and incapacity all the time. Financial institutions allow flexibility with regards to repayments. Bottom line is that people to ensure that they protect themselves against all eventialities.  Losing ones job suddenly is an even more difficult situation for many. 

ACG

Chances are they will accept a payment plan for a few months, but you will only find out when you go in to arrears. It will be reflected on your credit report and it is not a case of all or nothing as some people think. If you can still pay the interest each month for example, that is far better than nothing. 

On the upside, shares seem to have had a better run this week so hopefully that will help to some extent if you do need to dip in to your savings. 

loveka

I guess in my case (and loads of others) I wouldn't get any government help in terms of benefits.

I guess I was thinking more that this would be a mass problem that people go into arrears. Thousands and thousands of people at the same time in arrears.

RelievedSheff

Given that coronavirus causes only mild symptoms similar to a common cold for a lot of people, why would there be thousands of people going into arrears? They don't when they get a common cold.

davidmcn

loveka said:

I guess I was thinking more that this would be a mass problem that people go into arrears. Thousands and thousands of people at the same time in arrears.

Even if that is the case, how/why would lenders make a special relaxation of their rules when presumably they in turn are still going to be expected to service the wholesale lending (or savers' accounts) from which they got your loan funds? It would need government intervention if it became a massive problem.

loveka

If businesses have to close this would have a huge impact on the employees as well. It isn't just about individuals being ill for a couple of weeks. 20% of people off work at once would mean 20% of people not active in the economy at any given time- perhaps over a 6 month period.

The impact on the leisure industry for a start would be major. Pubs, restaurants, hotels all with 20% fewer customers could send a lot of business into bankruptcy. 

foxy-stoat

At least we are not worried about Brexit anymore - now its COVID 19.

No one will relax the credit agreements customers sign up to.  You need to make sure you have enough savings should you lose your income for a few months or a year - or have another plan.  Not unlike anyone of the thousands of homeowners.

Brock_and_Roll

Wait to spring kicks in at the end of April and all this nonsense will be forgotten about.
As other have said, it is sensible practice to have 6 months worth of interest payments tucked away in the event of a crisis.

amnblog

Don't worry. All we have to do is sing Happy Birthday when we wash our hands

Thrugelmir

RelievedSheff said:

Given that coronavirus causes only mild symptoms similar to a common cold for a lot of people, why would there be thousands of people going into arrears? They don't when they get a common cold.

Flu is far worse than a common cold. Can literally leave you flat on your back for a few days.