Coronavirus mortgage holidays

Many people are experiencing financial issues because of COVID-19. One way in which you could get help is by applying for a mortgage repayment holiday. We explain how these work and how a mortgage holiday could be helpful at this time.

Many people are experiencing financial issues because of COVID-19. One way in which you could get help is by applying for a mortgage repayment holiday. We explain how these work and how a mortgage holiday could be helpful at this time.

Please note: The information in this article was correct at the time of publication on 26 November 2020 but, because of the impact of COVID-19, things are changing rapidly. We aim to keep this page updated, but please check with your mortgage provider or potential provider directly to confirm any details.

Tobi Owens
From the Mortgages team
minute read
Do you know someone who could benefit from this article?
Posted 26 NOVEMBER 2020

What is a mortgage holiday?

A mortgage holiday is a break from making mortgage repayments for a set amount of time, which a customer agrees with a lender. In March, as part of its package of measures to support people affected by COVID-19, the government agreed with mortgage lenders that they would offer three-month repayment holidays to households having financial difficulties because of the pandemic. The deadline for applying for a mortgage holiday has now been extended until 31 March 2021.

People can be given the option of reducing or pausing their monthly payments for this period.

Under the new guidance, eligible borrowers can defer their payments for up to six months in total. So if you’ve already had a payment holiday, you can top up as long as the holiday doesn’t go over six months. If you’ve already had six months of payment holiday you won’t be eligible, but the Financial Conduct Authority (FCA) says firms will provide tailored support, which may include the option to defer further payments.

The options to defer payments also extends to landlords whose buy-to-let mortgage payments are affected by tenants having financial difficulties because of COVID-19. Landlords must have given renters three six months’ notice if they want to end a tenancy and can’t start court proceedings until this has ended.

Who is eligible for a payment holiday?

You could be eligible if you’re experiencing problems with your finances because of the coronavirus situation and you’re up to date with your mortgage repayments. If you’re not up to date with your payments, then contact your lender to talk about what you can do.

The FCA says your lender shouldn’t need any evidence that your income has been affected by COVID-19, and there shouldn’t be any affordability checks or additional fees.

How do I arrange a mortgage holiday?

If you’re having difficulties making your repayments because of COVID-19, or think you will do, then it’s best to get in touch with your lender as soon as possible.

If you want more information or need help understanding your options when arranging a mortgage holiday, we've partnered with Koodoo to give you access to this mortgage holiday tool. It can offer you additional guidance specific to your circumstances during the coronavirus outbreak. 

Mortgage holiday tool

Will I be able to overpay in the future?

That might be possible, depending on your lender and your mortgage, but not all mortgages allow overpayments. If you do make overpayments, you might have to pay significantly more if your mortgage only has a short amount of time left to run. Your lender may also offer the option of extending the term (length) of the mortgage, or might allow you to make interest-only or capital-only repayments for an agreed period. Ask your lender about this when you arrange the mortgage holiday.

If I get a mortgage holiday, what happens to the end date of my mortgage?

Some lenders might offer to make a short extension to the term of your mortgage, which will push the end date back. If your lender offers this, then think carefully about how this would affect your finances before deciding whether this is right for you.

What if an extension to my mortgage takes me beyond retirement age?

It might not be a problem if your retirement date is flexible. But if your mortgage continues after you’ve stopped working, your lender will want to look at whether you can still make the repayments. If you’re concerned, discuss this with your lender to find a course of action that’s right for you.

How will a mortgage holiday affect my credit history?

It shouldn’t. The government says that if you agree a payment holiday with your lender, then they should record it in a way that doesn’t impact your credit score. You can always check your credit file, just to make sure. However, a payment holiday might affect your ability to get credit in future, as lenders take a range of information into account when deciding to lend.

If you have a payment holiday as part of tailored support, this could be recorded on your credit file.

What else do I need to know about mortgage holidays?

It’s important to understand that you will still owe the amount you didn’t repay during the mortgage holiday. And interest will also continue to be charged on what you owe, unless your lender tells you this isn’t the case. So, when the holiday ends, you’ll need to make up the payments you’ve missed.

The FCA says that payment holidays should only be taken when absolutely necessary and that if you’re able to keep paying your mortgage it will be in your best interests to do so.

Talk to your lender about how you can do this and think about the overall impact on your finances to help you make a decision that’s right for you.

Looking for a mortgage?

Compare mortgages in minutes to see if you can save

Compare now
Compare mortgages in minutes to see if you can save Start comparing uses cookies to offer you the best experience online. By continuing to use our website, you agree to the use of cookies. If you would like to know more about cookies and how to manage them please view our privacy & cookie policy.