Mortgage payment holidays
Updated at 1:00pm on Thursday 5th November 2020
As a result of coronavirus, we understand you may well be worried about making your mortgage payments. If you are, a mortgage payment holiday could help.
What is a mortgage payment holiday?
A mortgage payment holiday is a temporary break from paying your mortgage which can last between one and three months.
You can take a full or a partial mortgage payment holiday. If you’re able to make any mortgage payments during your mortgage payment holiday - a ‘partial mortgage payment’ holiday - you should. This will help reduce the overall cost of your mortgage in the long term.
It is important to remember that throughout your mortgage payment holiday, interest will continue to build up at the interest rate on your account.
I’ve yet to apply for a mortgage payment holiday
You can apply for up to three months' mortgage payment holiday
I’ve already had a mortgage payment holiday
We have a range of options available to you at the end of your mortgage payment holiday including the option to extend
Applying for a Mortgage Payment Holiday
Who can apply?
Mortgage payment holidays are available to mortgage customers who may be impacted by coronavirus, plus buy-to-let landlords whose tenants are affected.
Am I eligible?
You can apply for a mortgage payment holiday if:
- Your finances have been - or you think they are likely to be - affected by coronavirus.
- You have consent from everyone named on the mortgage.
If you’re unsure whether a mortgage payment holiday is the right option for you, please call us on (freephone) 0800 072 9739 to discuss your options.
Will a mortgage payment holiday affect the amount I owe?
It’s important to remember that throughout your mortgage payment holiday, interest will continue to build up at the rate on your account. This means you’ll pay an increased amount of interest over the term of your mortgage. When you start making mortgage payments again, they may be higher than you previously paid.
Once your mortgage payment holiday comes to an end, we’ll write to let you know your new mortgage payment. This will reflect the interest and payments that built up during your mortgage payment holiday. The example below shows you how this may work.
You have 10 years left on your mortgage with a balance of £100,000, you are on a fixed five year rate of 1.88%, followed by our Standard Variable Rate of 5.29%:
- After taking a three month mortgage payment holiday, your monthly payment would increase from £914.14 to £939.83. The total amount you repay would be £114,773.31, an increase of £400.71 in interest.
For more examples of how a mortgage payment holiday affects how much you owe, take a look at the table below.
|10 Year Term Remaining||20 Year Term Remaining|
|Monthly Payment Before||£914.14||£499.91|
|1 month mortgage||payment holiday|
|New monthly payment||£922.54
|New total repayable balance||£114,505.46
|2 month mortgage||payment holiday|
|New monthly payment||£931.14
|New total repayable balance||£114,638.52
|3 month mortgage||payment holiday|
|New monthly payment||£939.83
|New total repayable balance||£114,773.31
The figures are meant as a guide and may vary due to individual circumstances and mortgage products you may take during the life of your mortgage.
Managing your finances
A sensible first step is to work out your income and outgoings. That's why we recommend you complete a budget planner on the Paylink website. It lets you see where your money is going and prioritise your most important debts. Paylink Solutions Limited is authorised and regulated by the Financial Conduct Authority. You may also find these guides from the Money Advice Service (opens in a new tab) and FCA (opens in a new tab) useful.
If you want an example that shows you how your monthly mortgage payments will change, then please visit this online calculator at MortgageHoliday.co.uk. This may help you decide if a mortgage payment holiday is right for you.
Before you use the calculator
You'll need some basic information such as your:
- – loan balance.
- – remaining mortgage term.
- – interest rate.
You can find all of these on your annual mortgage statement.
Once you’ve completed your budget planner – and prioritised your outgoings – you can check whether you’re able to afford your new monthly mortgage payments. If you’re still concerned, we have a number of options available to help.
There may be other ways to reduce your mortgage payments which could suit you better.
- If you’re on our standard variable rate, there may be a lower rate deal available that you can switch to. You can find out how to do this here.
- If you’ve previously made overpayments on your mortgage – and would like to use this to reduce your monthly mortgage payments – call us on (freephone) 0800 072 9739. Please continue with your payments as normal until you’ve spoken to us.
- If you want to reduce your monthly payment, you may be able to extend the term of your mortgage. This offers a longer term option and will cost more over the whole of your mortgage. Call us on 0800 072 9739 if you’d like to find out more.
What happens at the end of the mortgage payment holiday?
- We’ll send you a confirmation letter with your new monthly mortgage payment amount and further information.
- Your monthly mortgage payments will start again after the mortgage payment holiday ends.
- Depending on your chosen method of repayment:
- - your monthly payments may be higher than before.
- - the total interest owed on your mortgage may increase.
- If you have a capital and interest mortgage, the capital not paid over this period will still need to be repaid. We'll send you more information about this in your confirmation letter.
Taking a partial mortgage payment holiday
If you’re able to make any mortgage payments during your mortgage payment holiday - a ‘partial payment’ holiday - you should. This will help reduce the overall cost of your mortgage in the long term. You can find out more about how to make payments using our secure automated payment line or your online banking here.
If you were in arrears before taking a mortgage payment holiday, any payments received during your mortgage payment holiday will be used to clear your arrears first. If you don’t make any payments during your mortgage payment holiday, then your arrears will remain unchanged.
How do I apply?
- Use our online form if you pay by Direct Debit and:
- – are up to date with your mortgage payments.
- – or are less than one month in arrears.
- Call (freephone) 0800 072 8738 if you don’t pay by Direct Debit or:
- – Your mortgage is made up of more than one part. (For example, part repayment part interest only, or you’ve taken additional borrowing on your mortgage.)
- – You’d like to talk to someone before you take out a mortgage payment holiday.
- Call (freephone) 0800 072 9739:
- – If you are over one month in arrears.
Mortgage payment holidays and your credit file: Taking a mortgage payment holiday in these circumstances won’t have a negative impact on your credit file. You should bear in mind, however, that some lenders may take into account other information when making future lending decisions. For example, this could include details provided by applicants or bank account information.
When will my mortgage payment holiday start?
Where possible we will start your mortgage payment holiday from your next monthly payment. If this payment is due in the next three days, please call us on (freephone) 0800 072 9739.