Payment Holidays

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Payment Holidays

If you're taking a break from your mortgage payments, you might be wondering what happens when your payment holiday ends.

While you're on your payment holiday, you don't need to do anything. We'll write to you before it ends to let you know:

  • Your new monthly payment amount. This will be higher than before your payment holiday, to cover the interest charges and payments you missed while you took a break.
  • How we can help if your income is still affected by coronavirus. We'll tell you how we can help if you'd like some more support.

In the meantime, please don't call us. Rest assured we'll be in touch before your current payment holiday ends.

If you're in a position to resume your payments after your break, we strongly recommend that you do so to keep your monthly payments and interest charges as low as possible. However, if you find that you need further support when your payment holiday ends, you may be able to take another payment holiday for an extra 3 months or, if you think your income will be affected longer term we can discuss other ways we can help. Remember there is no need to contact us, we'll be in touch before your current payment holiday ends on how we can help.

You can find out more about the options we have to support you on our dedicated page.

Coronavirus and payment holidays

As the impact of coronavirus is felt across the UK, you may be worried about how it could affect you and your home. Your peace of mind is still our top priority, so we've created some extra ways to help, if you need it.

If the coronavirus has affected your income, you may wish to take a mortgage payment holiday but you should only apply if you are experiencing difficulties in making your mortgage payments.

What is a payment holiday?

A mortgage payment holiday is a break from paying your mortgage. Payment holidays will not have a negative impact on your credit file. However, you should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.

You can ask to take a break of up to a maximum of three months if you have been impacted through coronavirus.

How will this impact my future mortgage payments?

If you take a mortgage payment holiday you won't make mortgage payments for up to 3 months. During this period interest will continue to be charged at your existing interest rate(s) and the total amount of interest you pay over the term of the mortgage will increase.

This will result in a higher mortgage balance than if you'd not taken out a holiday. At the end of your payment holiday we'll recalculate your payments over your remaining term, taking this increase into account.

In this way, if you have a repayment mortgage the new monthly payment will ensure you repay the full outstanding balance by the end of your existing mortgage term by spreading the payments you haven't made over your remaining term.

If you have an interest-only mortgage - you should make sure that you have enough money put aside to repay the higher balance when your term ends.

There may be other ways for you to repay the payments you've missed, for example by making a lump sum payment. But don't worry, before your payments are due to restart we will write to you with more details and give you all the options available.

Payment holiday examples

Here are some examples of how a payment holiday can affect monthly payments and the total amount payable for repayment and interest-only mortgages. The examples shown below are for a three-month payment holiday.

Repayment mortgages

Current outstanding mortgage balance £50,000 £100,000
Interest rate 2.75% 2.75%
Term remaining 7 years (repayment mortgage) 20 years (repayment mortgage)
Current monthly payment £655 £542
New monthly payment after payment holiday £682 £551
Monthly increase £27 £9
Total amount to repay without payment holiday £55,024 £130,120
Total amount to repay with three-month repayment holiday £55,219 £130,605

Interest only mortgages

Current outstanding mortgage balance £50,000 £100,000
Interest rate 2.75% 2.75%
Term remaining 7 years (interest only mortgage) 20 years (interest only mortgage)
Current monthly payment £114 £229
New monthly payment after payment holiday £115 £231
Monthly increase £1 £2
Total amount to repay without payment holiday £59,625 £155,000
Total amount to repay with payment holiday £59,691 £155,380

The capital amount repayable at the end of your mortgage term will also increase by any interest charged during the holiday period. You may need to consider whether you'll have sufficient funds to be able to repay this at the end of the mortgage term.

What other options are available

If you have an Offset Account you may be able to use this to cover your monthly payments during this period. You must decide which option is best for you.

Can I take a payment holiday?

You can apply for a payment holiday if:

  • your mortgage payments are up to date.
  • if you are behind with your mortgage payments please visit our financial difficulties page for more details on how we can support you.
  • where you have a joint mortgage, everyone agrees to the payment holiday.

How it works

1. We'll write to you to let you know if your request has been accepted. Please allow up to ten working days for a response.

2. If you take a payment holiday, when it ends your monthly payment will go up. This is because during the payment holiday period interest will continue to be charged and your mortgage balance will increase. Your monthly payment will be calculated on the new balance and for repayment mortgages, the payments which haven't been made will be spread over the remaining mortgage term.

3. There may be other ways for you to repay the payments you've missed, we'll write to you with more details on your options before your payments are due to restart.

4. As long as you are not already behind with your mortgage payments, then your payment holiday will not impact your credit rating.

5. If you are already behind with your mortgage payments, then your payment holiday will not increase the number of months you are behind and will not worsen your credit rating.

6. If you are behind with your mortgage payments please ensure you have visited our financial difficulties page for more details on how we can support you before submitting this form.

Important Information

It's important to note that the amount you owe will go up as we'll still charge interest for the duration of your payment holiday.

You'll need your 10-digit mortgage account number. You can find this in Online Banking or on any letters you've had from us about your mortgage.

You should also be aware that because we're busier than usual, it may take up to 10 working days for your payment holiday to take effect.

If your next mortgage payment is due in the next 10 working days, your payment holiday may not start until the following month. We'll send you a letter to confirm the start date of your payment holiday.

How do I apply for a payment holiday?

Mortgage payment holidays can help with a temporary reduction in outgoings. However, your mortgage balance will increase and you will pay more over the term of your mortgage. So it's important that you only apply if you're currently having difficulties making your mortgage payments.

If you still want to apply, we're currently dealing with a much higher number of phone calls than usual, so you may find it quickest to ask for a payment holiday online.

Before you apply you'll need to use our payment holiday impact calculator, which will show you how taking a break from your payments could affect your mortgage and how much you pay each month. It's important you understand the impact a payment holiday could have on your mortgage before asking to take a break from your payments.

Payment holiday impact calculator

What are my options after a payment holiday?

When your payment holiday ends, the amount you pay each month will go up. This new monthly amount is to cover the interest charges and payments you missed while you took a break.

We'll write to you before the end of your payment holiday to confirm your new monthly amount. We have some options to help you catch up.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

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