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  • Writer's pictureEmily Macpherson

Mortgage Payment Holidays

On Tuesday, the chancellor announced a raft of financial measures designed to alleviate some financial pressure on households affected by Covid-19, including mortgage payment holidays of up to 3 months. We have had a number of questions from clients about how a payment holiday works, and how to apply for one, so we thought it would be useful to share what we know so far…

Who is Eligible?

  • Payment holidays are only available to homeowners affected by Covid-19 who are currently up to date with mortgage payments (not those who have already fallen behind).

  • You will need to explain your difficulties to your lender, but there should not be any need to prove that your finances have been adversely affected by Covid-19

How Does it Work?

  • Once your lender has agreed a payment holiday, repayments will be deferred for up to three months – so you won’t have to meet mortgage payments during that time.

  • Different lenders may apply slightly different rules, but generally the deferred payments are added to your mortgage balance and will need to be repaid at some point.

  • Your monthly repayments will increase at the end of your payment holiday to reflect the increased mortgage balance.

An example:

A mortgage of £100,000 repaid over a 25 year term at an interest rate of 2.5% will cost £448.62 each month. After a 3 month payment holiday, monthly payments would increase to £454.71.

Impact on Credit Score

  • Usually, if mortgage payments are missed this is reflected on your credit file, but we have been advised that under the current exceptional circumstances, lenders will ensure that credit scores are not affected.


  • It is important that you let your lender know if you are experiencing difficulties so that they can pause payment. This will ensure your credit score is protected.

  • Your lender may require a reasonable amount of notice to be able to pause payments, so make sure you contact them as soon as possible if you encounter financial difficulties.

  • This measure will provide some welcome breathing space for many, but it is important to be aware that interest will still be added to your mortgage during any holiday period, and that monthly mortgage payments are likely to increase after the payment holiday period.

Please do not hesitate to contact us if you have any queries about your mortgage.

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