What is a mortgage payment holiday and when can I get one?

Full answer

A mortgage payment holiday is a temporary arrangement, agreed individually with your mortgage lender, that allows you to pause or significantly reduce your monthly mortgage payments for a set period, usually a small number of months, when you are experiencing genuine, often temporary, financial difficulty, such as job loss, illness, or another significant change in circumstances. It is important to understand this is not an automatic right or a blanket scheme -- outside of specific, time-limited Government or industry-wide schemes introduced during exceptional circumstances (such as the payment deferral scheme widely offered during the Covid-19 pandemic in 2020), payment holidays are granted at the individual lender's discretion, following a conversation with their customer support or financial difficulties team, and the lender will usually want to understand your specific circumstances and a plan for how you will resume normal payments afterward. Critically, agreeing a payment holiday almost always means interest continues to accrue on the full outstanding mortgage balance during the holiday period, even though you are paying nothing (or a reduced amount), meaning the total amount you owe increases, and your future monthly payments, or the length of your mortgage term, may need to increase afterward to make up the shortfall. A formally agreed payment holiday, requested proactively before you miss any payments, is treated very differently by your credit file compared with simply missing payments without agreement, which can seriously damage your credit score and, in the worst cases, ultimately lead to repossession proceedings -- so anyone struggling to pay their mortgage should contact their lender as early as possible, since lenders are required by the Financial Conduct Authority to treat customers in financial difficulty fairly and explore all reasonable options before considering repossession.

Try the calculator