Payment holidays.

Are you coming to the end of a payment holiday? Please do not call us. We'll write to you before your payment holiday ends to explain your options. In the meantime, find out more about what happens when your payment holiday ends.


Coronavirus and payment holidays

As the impact of coronavirus is felt across the UK, you may be worried about how it could affect you and your home. Your peace of mind is still our top priority, so we’ve created some extra ways to help, if you need it.

If the coronavirus has affected your income, you may wish to take a mortgage payment holiday but you should only apply if you are experiencing difficulties in making your mortgage payments.

Please note: If your mortgage has moved to us from Tesco Bank, you’ll need to access our dedicated payment holiday information.

What is a payment holiday?

A mortgage payment holiday is a break from paying your mortgage. It won’t affect your credit rating, so there’s one less thing to worry about.

You can ask to take a break of up to a maximum of three months if you have been impacted through coronavirus.

How will this impact my future mortgage payments?

If you take a mortgage payment holiday you won’t make mortgage payments for up to 3 months. During this period interest will continue to be charged at your existing interest rate(s) and the total amount of interest you pay over the term of the mortgage will increase.

This will result in a higher mortgage balance than if you’d not taken out a holiday. At the end of your payment holiday we’ll recalculate your payments over your remaining term, taking this increase into account.

In this way, if you have a repayment mortgage the new monthly payment will ensure you repay the full outstanding balance by the end of your existing mortgage term by spreading the payments you haven’t made over your remaining term.

There may be other ways for you to repay the payments you’ve missed, for example making a lump sum payment. But don’t worry, before your payments are due to start we will write to you with more details.


What could this mean for my mortgage?

Our payment holiday calculator will show you how taking a break from your payments could affect your mortgage and how much you pay each month. It's important you understand the impact a payment holiday could have on your mortgage before asking to take a break from your payments.

Payment holiday impact calculator

Payment holiday examples

Here are some examples of how a payment holiday can affect monthly payments and the total amount payable for repayment and interest only mortgages. The examples shown below are for a three-month payment holiday:

Repayment mortgages

Current outstanding mortgage balance £50,000 £100,000
Interest rate 2.75% 2.75%
Term remaining 7 years (repayment mortgage) 20 years (repayment mortgage)
Current monthly payment £655 £542
New monthly payment after payment holiday £682 £551
Monthly increase £27 £9
Total amount to repay without payment holiday £55,024 £130,120
Total amount to repay with three month repayment holiday £55,219 £130, 605

 

Interest only mortgages

Current outstanding mortgage balance £50,000 £100,000
Interest rate 2.75% 2.75%
Term remaining 7 years (interest only mortgage) 20 years (interest only mortgage)
Current monthly payment £114 £229
New monthly payment after payment holiday £115 £231
Monthly increase £1 £2
Total amount to repay without payment
holiday
£59,625 £155,000
Total amount to repay with payment holiday £59,691 £155,380


The capital amount repayable at the end of your mortgage term will also increase by any interest charged during the holiday period.
You may need to consider whether you’ll have sufficient funds to be able to repay this at the end of the mortgage term.


What other options are available?

If you don’t feel a payment holiday is right for you there are other changes that you can consider including:


Can I take a payment holiday?

You can apply for a payment holiday if:

  • Your mortgage payments are up to date
  • If you are behind with your mortgage payments please visit our coronavirus/financial difficulties page for more details on how we can support you
  • Where you have a joint mortgage, everyone must agree to the payment holiday

How do I apply for a payment holiday?

Mortgage payment holidays can help with temporary reduction in outgoings. However, your mortgage balance will increase and you will pay more over the term of your mortgage. So, it’s important that you only apply if you’re currently having difficulties making your mortgage payments.

If you still want to apply, we’re currently dealing with a much higher number of phone calls than usual, so you may find it quickest to ask for a payment holiday by using our online form.

Request a payment holiday

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.