How to apply for a mortgage payment holiday

Many property owners in the UK are still coming to terms with the full consequences of the new coronavirus outbreak, and what it might mean for the nation’s finances. As part of the government’s aid package intended to make financial matters easier for Brits over the coming months, Rishi Sunak promised mortgage payment holidays of up to three months, during which mortgage payments will be suspended.

What is a mortgage payment holiday?

Mortgage payment holidays should essentially give borrowers of both ordinary and BTL mortgages the opportunity to defer or reduce payments for up to three months if they are unable to pay their mortgage. Rishi Sunak made it clear that the holiday will not apply to everyone – only those who need it – and the holiday does not mean free money. Interest will still be accrued during the payment holiday and the capital sum of the loan owed will still remain. The measure is not intended to provide a long-term solution; it’s only to help customers to get through a temporary shortfall in income.

Mortgage payment holiday

What does my bank offer?

Individual banks are all publishing slightly different eligibility requirements for mortgage holidays, but broadly speaking you will need to have already taken out a mortgage with your bank and you may need to claim that your finances have been affected by coronavirus. Some banks, including Barclays, will offer a holiday if you have previously overpaid on your mortgage, and some, such as Halifax, require that you are up to date on your current payments. The best thing to do is to contact your lender and discuss your options. While the vast majority of banks are offering holidays to both ordinary mortgage payers and BTL mortgage payers, it’s worth noting that some banks – such as Barclays – are only offering holidays for ordinary mortgages.

How can I apply for a mortgage holiday?

To apply for a mortgage payment holiday, you should first contact your lender and let them know that you’re experiencing difficulties due to the coronavirus outbreak. Your lender will then discuss your options with you, and if you are eligible, you should be fast-tracked to approval without having to provide evidence. Be sure to discuss options for covering the deferred payments with your lender, such as extending the mortgage slightly or spreading out the cost of the payments over the remaining term of your mortgage.