Payment holiday for debt repayments
A payment holiday gives you a short break from paying your mortgage. This can help when money is tight, but it is important to only take it if you really need it.
What is a mortgage payment holiday?
A mortgage payment break is when part or all of your mortgage payments are put on hold for a set period of time.
You still have to pay off the whole mortgage, either by:
- Increasing your monthly payments, or
- Extending the mortgage term
You may also end up paying more in interest over the long term. You should aim to make full or partial payments if you can.
There is no fee to set up a payment holiday.
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How do I apply for a mortgage payment holiday?
There are three steps to apply for a mortgage payment holiday:
- Speak to your lender
- Request a payment holiday
- Your lender decides based on your situation
A payment break needs to be agreed with your lender. Do not stop Direct Debits until you speak to them.
- Missed payments go on your credit file
- This can make it harder to get credit in future
- This can make it harder to remortgage
What options will my lender give me for a mortgage payment break?
Your lender will talk to you about paying back the payments you miss.
They may suggest one or all of these options:
- Increasing your monthly payments
- This spreads your missed payments over the rest of your mortgage term
- Increasing the length of your mortgage term
- This means you pay back your mortgage over a longer time
- Your monthly payments may increase too
- It means you pay slightly more interest because of extra payments
- Making interest-only or capital-only payments
- This means, effectively, making partial mortgage payments
- You still pay what you missed
- Usually through increased or longer payments
What happens at the end of my mortgage payment holiday?
You will have to start paying again after your mortgage payment holiday.
- This includes what you missed during the holiday
- Payments may be higher
- They mortgage term may be longer
- There will be more interest
I am currently behind on my mortgage payments. Can I still apply for a payment holiday?
You may still be able to get a payment break if you are already behind on payments.
Your lender can discuss options with you.
I am worried about repossession. What should I do?
Speak to your lender right away.
You may also be able to get Breathing Space which gives you some time to find help.
Does taking a mortgage payment holiday affect my credit rating?
A payment holiday is not marked as a missed payment on your credit file.
Speak to your lender if you are worried about any impact to your score.
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Can I still get a mortgage holiday if I am on a debt management plan (DMP)?
Yes, you can still get a mortgage holiday on a DMP. Unless you have mortgage arrears.
Speak to your lender. They may be able to help you.
What is the difference between deferment and forbearance?
Mortgage payment holidays are a form of deferment.
- This means you delay paying until you can afford it
Forbearance is when the people you owe give you relief from:
- Payment
- Interest
- Charges
What if I cannot pay my mortgage this month?
Contact your mortgage lender if you cannot afford your monthly payments.
They can talk through options with you.
You can also get free, impartial debt advice to:
- Build a budget
- See what help there is
- Find the right solution for you
