Mortgage ‘holidays’ during the coronavirus

Payment holidays

A ‘payment holiday’ means you agree with your lender that you will not have to make mortgage payments for a set amount of time. This is designed to help you when you may experience payment difficulties – in this case because of the coronavirus situation.

It is important to remember that you still owe the amounts that you don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount you owe.

This means that, at the end of the payment holiday, you will have to make up the missed payments. There will be various options for doing this, for example by increasing your monthly payments slightly, or by adding a short extension to your term. Your lender will be able to explain to you what options it offers.

Applying for the payment holiday

You should contact your lender if you are experiencing or reasonably expect to experience payment difficulties because of circumstances related to coronavirus.

It is only a payment holiday if it has been agreed with your lender.

You should not cancel your direct debit without speaking to your lender first. Cancelling your direct debit is not a payment holiday and will be counted as a missed payment. This could show up in your credit file and may impact your ability to re-mortgage.

Your credit file

Our guidance makes clear to firms that they should ensure that taking a payment holiday will not have a negative impact on your credit file.

Applying for a mortgage holiday

If you are experiencing or reasonably expect to experience payment difficulties and may need a payment holiday, you should speak to your lender in good time before the next payment is due. Please be considerate of others when contacting your lender and allow those with much closer dates into the queue first.

You can apply for a payment holiday at any time before this guidance is reviewed in 3 months. The payment holiday will not start, however, until it has been agreed with your lender.

Repossessions

During this current period of unprecedented uncertainty and upheaval we do not think people should be at risk of losing their homes. We therefore expect lenders to stop repossession action. This applies to all mortgage borrowers at risk of repossession, whether or not their incomes are affected by coronavirus. Many lenders have already committed to this.