Mortgage payment holidays: what you need to know

In March 2020, the UK Government announced that homeowners could apply for three month mortgage payment holiday if they were struggling financially as a result of the COVID-19 pandemic.

The application deadline was extended a couple of times, but the final deadline of 31st March 2021 has now passed and no extension was announced.
If you are worried about making your monthly mortgage payments, you should speak to your lender to discuss options as they may still be able to offer a payment holiday or reduction.

How do mortgage payment holidays actually work? Our expert independent mortgage advisers at ESPC Mortgages answer some commonly asked questions about mortgage payment holidays in this article.

What is a mortgage payment holiday?

A mortgage payment holiday is when your monthly mortgage repayments are paused for a certain period of time. Under the financial assistance measures announced by the government, those struggling with financial difficulties due to Coronavirus COVID-19 could ask their lender for break in mortgage repayments, however the deadline for applications has now passed.

Who is eligible for a mortgage payment holiday?

The mortgage payment holiday scheme has been put in place to homeowners who are struggling financially due to the ongoing Coronavirus COVID-19 pandemic. It was available to homeowners who were up to date on their mortgage payments.

It was also extended to landlords and buy-to-let property owners whose tenants were struggling to pay their rent due to financial difficulties. Landlords who took a mortgage payment holiday were expected to pass this financial relief to their tenants.

The application deadline for a mortgage payment holiday has now passed, but you should still speak to your lender if you are struggling with mortgage repayments in order to discuss your options.

Is a mortgage payment holiday a good idea?

A mortgage payment holiday is useful for households struggling with their month-to-month budget, as a break in mortgage repayments may help to ease financial pressures in the short term.

However, it should be noted that if you defer your mortgage payments, you will pay more interest over the term of the mortgage. Your monthly payments are also likely to increase slightly after a mortgage holiday as, due to the accrued interest, the balance of your mortgage is likely to have increased.

Will a mortgage payment holiday affect my credit rating?

No, a mortgage payment holiday should not affect your credit rating. On 31st March 2020, the credit reference agencies Experian, Equifax and TransUnion confirmed that homeowners will have their credit scores protected when they take out a mortgage payment holiday.

ESPC Mortgages

ESPC Mortgages is here to help homeowners and buyers during these unusual times. Get in touch with the team today on fsenquiries@espc.com or 0131 253 2920.

David Lauder, Independent Mortgage Adviser with ESPC Mortgages, said: “As a team of independent mortgage advisers with many years of experience in the industry, we can help to guide clients through this unprecedented situation.”