Mortgage Holiday

Due to the COVID-19 pandemic the main mortgage providers have offered mortgage holidays to their customers. This means you can take a three-month break from paying your mortgage, if you need to.

Here’s more information.

What is a mortgage holiday / mortgage break?

A mortgage holiday is an arrangement (agreed by the mortgage provider) in which the customer can stop making mortgage payments for a specific period of time. This is proving to be popular during the coronavirus lockdown, with the latest figures showing that one in seven mortgage holders has chosen to take a three-month break from their payments.

In order to take a mortgage break, you’ll need to get in touch with your provider. It’s not acceptable to cancel your direct debit payments without speaking to them first.

What are the benefits to taking a break from mortgage payments?

Mortgage holidays are there to help alleviate financial stress. The three-month break is in place to reduce pressure, allowing you to spend your savings elsewhere. During this three-month period, you’ll be able to apply for financial support from the government (for example, a business grant or Universal Credit).

A mortgage break is regarded as a ‘breather’ – a chance to get your finances in order, without the pressure of a large mortgage payment to worry about each month.

  • Will I have to make up the amount that I’m not paying during the mortgage break?
    • Yes, you’ll still have to make the payments – just not during the ‘holiday period’. Your mortgage provider will stipulate how and when the money will be repaid.

  • Will I be charged interest while I’m not paying?
    • Unless your mortgage provider has specifically said otherwise, you’ll still be charged interest on the payments, even if you’re not paying them at the time.

  • Will it negatively impact my credit rating if I take a mortgage break?
    • The FCA has explicitly said that mortgage brokers need to make sure that payment breaks don’t negatively affect your credit file.

  • When will I have to repay the money?
    • This depends on your lender. Some might add the missed payments to the end of the mortgage term. Alternatively, you might be put on a repayment plan for a limited period of time. The only way to know for sure is to speak directly to your mortgage provider.

  • Is there an advantage to taking a mortgage holiday?
    • It shouldn’t be viewed as a chance to benefit financially. The government has stated that homeowners should only use a mortgage holiday if they’re struggling to meet the monthly payments. This applies if your earnings have been impacted, if you’ve lost your job, or if you’re too unwell to work.

Should you take a mortgage break or not?

You should only take a three-month break from your mortgage payments if you absolutely need to. There’s no real advantage to doing so otherwise, as you’ll still have to pay back the money in the future, plus the interest owed.

If you want to apply for a mortgage holiday, get in touch with your lender today to start the ball rolling. Be aware that their phone-lines are busy – so it’s best to act sooner rather than later, to avoid undue stress.