Mortgage payment holidays can be a good way to ease your financial situation if you're struggling. However, there are reasons why you shouldn't take one unless it's absolutely necessary.
What is a mortgage payment holiday?
A mortgage payment break is when part or all of your mortgage payments are put on hold for a set period of time. However, you should bear in mind that you’ll still have to pay off the entire mortgage, either by increasing your monthly payments, or extending the term of your mortgage.
Mortgage payment holidays offer flexibility in reducing or stopping your mortgage payments. However, you may have to pay more over the long term in interest. For this reason, if you can afford to make full or partial payments to your mortgage, you should do so.
Your mortgage lender will not charge you an additional fee to set up a payment holiday.
How have mortgage payment holidays changed due to coronavirus?
On 17 March, it was agreed with the government that banks, building societies and other mortgage lenders should offer all existing mortgage customers the option of a three-month mortgage holiday.
This has now been extended to six months. If your finances have been affected by coronavirus and you want to request a mortgage holiday from your lender, you have until the 31st of October 2020 to apply. If you’ve already had a payment holiday of three months, you can now request it to be extended for another three months.
These new rules are a direct response to the financial difficulties caused by coronavirus. You don’t need to have had coronavirus yourself to qualify for a payment holiday.
Can I apply for a mortgage payment holiday if I haven't been affected by coronavirus?
Yes, you can still apply for a payment holiday if your situation has not been adversely affected by coronavirus. However, if this is the case, speak to your mortgage lender to see what they’re willing to do.