What are payment holidays?

How do payment holidays work?

You need to ask for a payment holiday, but the people you owe do not have to agree to it.

The gap in payments may be marked on your credit file. This can make it harder to get credit in future.

The people you owe may issue a default notice. This depends on how long the payment holiday is.

Payment holiday letters

Under the rules of the Consumer Credit Act:

• Lenders must send warning letters to customers who miss two payments
• They do this even if you agreed a payment holiday with them

Can I get a credit card payment holiday?

Ask the people you owe for an informal break from payments and give you time to deal with debts. They may decline, as different lenders consider requests differently. Be aware that a payment break may affect your credit score.

In Scotland, the Government offer a ‘moratorium’ period:

• This is for people who have debt problems
• It lasts six months
• The people you owe cannot take action to recover the money owed

If you are considering a moratorium you do not need to get debt advice from an approved money adviser. But, we strongly recommend you do get advice.

Can I get a mortgage payment holiday?

Mortgage payment holidays are for people finding it hard to keep up with payments.

You can apply if you have kept up-to-date with your payments

There may be other ways your lender can help you. Like letting you make lower payments.

Find out more about dealing with mortgage arrears.

Unlock your options as a homeowner

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Find out more about how to deal with mortgage arrears, fixed rate ending, how debt can affect your home - and more.

Read our guides

Can I get a break from paying my rent?

You can ask for a payment break. But there is no guarantee the local authority or landlord will agree.

Read our guide to dealing with rent arrears.

How do I ask for a payment holiday?

You need to give some supporting information when you ask for a payment break.

This includes:

• Your bank
• Your local authority, or
• Your landlord

They will probably want to know about:

• Your income
• Your living expenses
• Any other debts
• Any change to your financial situation

Show this by filling in an income and expenditure form based on your budget.

You will need to tell the people you owe:

• Why you are asking for a payment break, and
• When you will be able to make normal payments again

If they agree to a payment break, ask them to send you a letter or email to confirm this.

You need to pay back missed payments after the payment break ends, either by:

• Making higher future payments, or
• Paying the agreement back for a longer time

The people you owe may not agree.

Contact us if they do not. We can help find the best solution for you.

What happens at the end of a payment break?

Interest may be charged for when you were not paying. This can make your future payments higher.

Prepare in advance for the end of a payment break. Think about what happens to your debts.

Mortgage

• Your monthly payment rises to include the missed payments and extra interest
• Your new payment amount depends on how long is left of your mortgage term
• In most cases, the longer left in the term, the lower the rise in payments

Loan

• Your monthly payment to the loan rises
• This is to cover the missed payments and interest charged during the payment break

Credit card

• Your monthly minimum payments rise
• This covers the extra interest that was not paid