Your finances and COVID-19
You may be worried about falling into financial difficulties during COVID-19. For example, if your income drops due to COVID-19 or you have unexpected expenses, you may find you don’t have enough to cover your usual outgoings.
This document answers some of the questions you might have around paying your bills and meeting other financial commitments.
If you have a COVID-19 payment break which is coming to an end you should contact your lender to see what your options are. Lenders must deal with your case taking into account your individual circumstances. You should talk to your lender as early as possible – see ‘What support can I get from my bank?’ below.
You can watch this video from the Central Bank of Ireland about COVID-19 – Your Mortgage. The Banking and Payments Federation of Ireland (BPFI) also has a video Guide to coming off the COVID-19 Mortgage Payment Break.
What financial supports are available?
If your income drops due to COVID-19, you may be entitled to income supports. You can also see our document on your employment rights during COVID-19 restrictions.
- If you are sick and cannot work: Find out what your employer’s position is on sick pay. The Government has introduced a number of temporary measures to help you if you have to take time off work to self-isolate or if you are ill. You can get more information on Illness Benefit during the COVID-19 pandemic.
- If you cannot work because you have to take care of children or dependents: First of all you should find out what your employer’s position is on leave to look after children. The Government has asked employers to be as flexible as possible in allowing staff time off to look after their children or other members of their families.
- If you have no work or reduced hours: You may be eligible for support from the Department of Social Protection (DSP) or your employer may be able to continue to pay you under the Employment Wage Subsidy Scheme. You can get more information on the COVID-19 Pandemic Unemployment Payment and on social welfare supports and COVID-19.
What to do first if you have lost income
If you have been affected by a loss of income or think you will be in the near future, you should try to take the following steps:
- Check to see what financial supports are available, depending on your own situation (see above).
- Develop a short-term budget for a period of 3 months to give yourself a better understanding of money coming in and money going out and identify any shortfall. The Money Advice and Budgeting Service (MABS) website has a budgeting tool and a Household Budget Sheet (pdf).
- When you prepare your budget, focus on priorities – food, utilities, accommodation, phone and broadband connectivity, medical care and expenditure on your children or dependants.
- If, after you have developed a budget for the next 3 months, you think you are going to have a difficulty in making payments or repaying loans you should contact your creditors by email or phone. It is fine to contact by phone but you should always follow up in writing (see ‘Can I get support from my bank?’ below).
- Creditors are aware that COVID-19 is going to impact on people’s income. They should be willing to work with you to reschedule over the short-term, where this is necessary based on what you can afford to pay. It is important to get in touch early.
- If possible, try to avoid borrowing more as a solution to a drop in income. Where you can, avoid high cost credit like moneylending loans.
Which outgoings should I prioritise?
If your income drops due to COVID-19 you may find you don’t have enough to cover your usual outgoings. Here are some steps you can take:
Step 1: Focus on priority living costs, you should prioritise spending on food, medical care and utilities to prioritise your health and wellbeing.
- Food: You can get recipes to plan and get best value for your money in this MABS resource (pdf)
- Medical costs: You should monitor and follow the health advice from the HSE
- Utilities: You should continue to make payments on utilities such as gas and electricity to avoid disconnection. If you are eligible and not already on the vulnerable customers register, you should register now by contacting your supplier.
Step 2. Make a list of all your debts and bills - your debts might include, for example:
- Mortgage or rent
- Credit card
- Hire purchase payments
- Utilities such as phone or internet bills
- Payments to Revenue
Make a list of who you owe money to and how much your debts or bills are each month. Make sure you can pay for your priority living costs before you prioritise payments of other bills and debts. You can use the MABS Household Budget Sheet (pdf).
Step 3: Prioritise your payments - work out which debts you need to pay first after prioritising food, medical and utility costs. Some debts are more important than others. Generally, these are where creditors have extra powers to, for example, repossess property or evict you.
- Mortgage payments: if possible, you should continue to pay your mortgage. If you don’t think you can make the full repayment due to a drop in income you should contact your lender as soon as possible. You may be able to avail of a payment break on your mortgage. You should maintain the maximum payment you can afford towards your mortgage.
- Rent payments: this is a priority because you want to maintain payments to support your tenancy. If you are having problems meeting your rent payments, contact Threshold, the national housing charity, which provides information and advice to people in private rented housing. You can read about Renting and COVID-19.
Step 4: Contact your creditors if you feel that you may fall behind on your payments.
What support can I get from my bank?
In March 2020, the 5 retail banks (AIB, Bank of Ireland, KBC, Permanent tsb and Ulster Bank), along with their representative body the Banking & Payments Federation Ireland (BPFI) announced a series of measures to support people and businesses impacted by the COVID-19 pandemic. The measures include non-bank mortgage lenders and credit servicing firms, and were extended to include a payment break of up to 6 months on 30 April 2020.
- A payment break of up to 6 months for businesses and personal customers
- A simplified application process to make it easy for businesses and personal customers to get support from their bank
- A solution to ensure that COVID-19 application for a payment break will not affect your credit record
- Deferral of court proceedings for up to a maximum of 6 months from March 2020
You can get more detailed information from the following:
- The BPFI's COVID-19 support FAQ, Guide to the COVID-19 Payment Break (pdf) and Guide to Coming off the Covid-19 Mortgage Payment Break (pdf).
- The Central Bank of Ireland's COVID-19 Consumer FAQ, has information on banking and payment breaks.
How does a payment break work?
A payment break is also known as a temporary deferral of payment, payment holiday or moratorium. It is an agreement with your lender allowing you temporarily to stop your monthly mortgage or loan repayments.
Lenders may offer you one of the following types of payment breaks:
- ‘Moratorium’ payment break – this means full loan repayments stop for an agreed period. Once this moratorium period has finished, future loan repayments on the mortgage or loan will increase. This happens because the loan must be repaid in full during the agreed term.
- ‘Interest only’ payment – you only pay interest on the loan during the agreed period. Your monthly repayments will be less during this period. However, because you are not paying any capital (the amount you borrowed), your loan balance will not reduce during this period.
The BPFI’s support FAQ has a worked example of how a payment break works in practice.
Will it impact on my overall cost of borrowing?
You will still have to pay the unpaid interest and capital repayments (known as deferred or postponed payments) at a later date. It is likely that your lender will spread deferred payments over the term of your loan. This will result in an increase to the cost of credit on your loan. This means that when your repayments start again they will be for a higher amount as your lender will add the deferred payments to your overall loan balance and keep the term the same. The shorter the term left on your loan or mortgage, the larger the increase in your monthly payments, once the payment break is over.
It is possible some lenders will consider increasing the length of your mortgage or loan term so that your repayment amount can stay the same.
Will it impact on my credit record?
If you agree to a payment break with your lender under a COVID-19 application, your credit history will not be affected.
If you agree to restructure your mortgage repayments after your payment break has ended, this will appear on your credit record.
The Central Bank has more information on how payment breaks will be specially recorded on your credit record.
How can I apply?
The closing date to apply for a payment break was 30 September 2020.
Can I get another payment break after the 6 month ends?
The European Banking Authority (EBA) has set a deadline of 30 September 2020 for lenders to grant payment breaks to borrowers. After 30 September, no new COVID-19 payment breaks will be granted.
Do I have to start making repayments again after the payment break ends?
Your repayments will start automatically once the payment break ends. If you are able to, you should start making repayments. If you don’t your loan could be classified as in pre-arrears or arrears. Missed repayments will also impact on your credit record.
What happens if my situation has not improved by the time the payment break ends?
Before your payment break ends, you should look at your financial situation by preparing a budget. This will help if you need to talk to your lender about revised repayments.
If after the payment break ends, you are still finding it hard to make repayments you should contact your lender to discuss your options. It is important that you engage with your lender at this point to find what suits your circumstances best.
Your lender will work with you to discuss if you can afford to resume full or reduced repayments. Lenders have a number of alternative repayment arrangements which may be available to you once the COVID-19 payment break ends. These arrangements can include:
- Payment breaks (the terms of which may differ to COVID-19 payment breaks)
- Other arrangements, such as interest only.
The lender must follow the rules set out in the Central Bank’s Code of Conduct on Mortgage Arrears (for mortgages) and Consumer Protection Code (for other loans).
You can find more information on the options available in:
- The Central Bank’s video COVID-19 – Your Mortgage
- The BPFI’s Guide to Coming off the Covid-19 Mortgage Payment Break (pdf) and video Guide to coming off the COVID-19 Mortgage Payment Break
If my financial circumstances improve later can I change my repayment plan?
If your circumstances change you should contact your lender to talk through the repayment options available to you. For example, you may be able to shorten the term of your mortgage or increase repayments if your circumstances improve.
Help for very high risk customers
The 5 retail banks (AIB, Bank of Ireland, KBC, Permanent tsb and Ulster Bank), all have a dedicated freephone helpline to help you if you are at very high risk from COVID-19.
Will my mortgage application be affected?
If you have an existing mortgage application, the following advice applies:
- Your existing mortgage approval (known as approval in principle) is not effected by the COVID-19 emergency
- You may be able to get an extension of 3-6 months on your approval in principle from your lender – if your financial circumstances have not changed
- Before the official mortgage approval or letter of offer is finalised, your lender may ask you to confirm if there is any change to your financial circumstances as a result of the COVID-19 emergency
- Where your circumstances have changed, you may have to provide your lender with up to date information on your income and employment situation
- This is part of the normal loan approval process where lenders make sure that the loan is affordable and suitable for you
Lenders are still accepting new mortgage applications. The BPFI has a COVID 19 FAQ which gives advice on mortgages.
Can I get any support from my landlord?
If you have been financially impacted by COVID-19, your rent cannot be increased before 10 January 2021.
Ireland moved to Level 5 of the Plan for Living with COVID-19 for 6 weeks on midnight 21 October 2020. A ban on evictions is in place for this period.
While tenants are expected to pay rent during the COVID-19 pandemic, income supports and Rent Supplement are available to you if you are struggling to pay. These supports are provided by the Department of Social Protection.
There are new rules and requirements for both landlords and tenants where you are facing rent arrears due to COVID-19.
You can read more in our page Renting and COVID-19.
What support can I get from my utilities supplier?
To help you remain connected to your electricity and gas supplies, domestic disconnections are suspended from 10 December 2020 to 31 January 2021.
There is no change to the emergency credit level for prepaid (Pay As You Go) gas meters.
You can read the full announcement and get advice on what to do if you have difficulty paying your utility bills, on the website of the Commission for Regulation of Utilities.
Can I get any support from Revenue?
If you have overpaid income tax or Universal Social Charge (USC) because of being laid off, any refund due to you will be administered by your employer and paid to you through payroll. Refunds will be repaid to your employer through Revenue’s COVID-19 Wage Subsidy Scheme. You should contact Revenue directly if you run into, or are facing difficulty in meeting a tax repayment or underpayment.
Revenue will work with you to resolve your payment difficulty on a case-by-case basis.
It was announced in Budget 2021 that the tax debt warehousing scheme will be extended to taxpayers who self-assess for income tax that are adversely impacted by Covid-19. Impacted taxpayers who cannot pay their 2019 balance and preliminary tax for 2020 can defer payment for 12 months.
If income for 2021 is also at least 25% lower than income for 2019, the balance of 2020 balance and 2021 Preliminary Tax can also be warehoused. Debts that are warehoused are subject to 0% interest for 12 months. After this 12-month period, a reduced interest rate of 3% per annum will apply and no surcharge will apply. More detail is available from Revenue.
Protect yourself from COVID-19 scams
Scams target people of all ages and backgrounds. Scams are about tricking you into parting with your money and are becoming more and more sophisticated and difficult to spot. Sadly, during the COVID-19 pandemic, fraud and other scams are increasing.
Gardaí have issued a warning in relation to a number of COVID-19 related scams. Examples include:
- Online shopping scams involving sought-after items like face masks and hand sanitiser
- People calling to your house offering services in relation to Covid-19, including services for medically-related tests
- Phising emails with an attachment claiming to contain vital information about the virus and prompting you to open the attachment
- Hoax websites asking you to make a donation to a fake charity supporting a COVID-19 cause
How can I protect myself?
There are things you can do to protect yourself from scams. You should:
- Know who you are dealing with: Research the company to make sure it is a legitimate business or charity. Look for contact details such as phone number, email and physical address. You can check a charity is registered with the Charities Regulator.
- Be alert for suspicious behaviour: Be aware of offers that seem too good to be true. Check the website is secure by looking for a closed security padlock symbol in the browser window bar. Don’t click or download anything you don’t trust.
- Protect your personal information: Don’t give out any personal information over the phone unless you initiated the call or, for example you know you are dealing with a real charity (you can call the charity back on their phone number in order to give your personal financial details). Don’t give out personal information in an email or when chatting online.
- Protect your money: Never send money by bank transfer unless you are absolutely certain you are sending it to someone you know and trust. Sending money by bank transfer is like sending someone cash and generally once you send it, it’s gone. Always use a secure method of payment such as credit card, debit card or other payment services such as PayPal (that offer a payment protection scheme). You can ask your bank or card provider to reverse the transaction through a process called chargeback.
The CCPC publish regular consumer warnings about misleading or fraudulent websites.
Where can I get more help?
The COVID-19 emergency is unexpected, sudden and overwhelming. The resources below may be useful if you are experiencing stress related to COVID-19: