What happens after a mortgage payment holiday?

Payment holiday extension requests

We are reviewing the recent Government accouncement regarding the extension of the payment holiday scheme.

If you have a payment holiday in place, we'll write to you around two weeks before it is due to end. Please don't contact us until you have received your letter as we won't be able to discuss specific options with you until the payment holiday is about to end.

If you made the decision to take a payment holiday on your mortgage due to the Coronavirus (COVID-19) situation, you might be wondering what happens once the holiday is over. We’ll write to you at least 7 working days before your mortgage payments resume. This letter will confirm your new monthly payment and give you some further options you can choose from, which are also mentioned below.

How we work out your new monthly payment

With a mortgage payment holiday the payments you make towards your mortgage are suspended, however the interest on your mortgage balance is not and the time left on your mortgage (your mortgage term) continues to reduce. This means that when the payment holiday ends, we need to recalculate your monthly payment across your remaining mortgage term to make sure that your mortgage balance will still be repaid within the remaining mortgage term.

Example of a repayment mortgage

The example below shows how this might work for a repayment mortgage (where you pay back the capital balance of the mortgage as well as interest each month). The figures in the example are illustrative only of how the process works. The letter we send when your payment holiday is due to end will contain detailed figures for your own mortgage account(s).

What's next?

If you are comfortable with your new monthly payment, then all you need to do is make sure you are ready to commence making your monthly payments again. If you pay by Direct Debit then this will resume automatically unless you have cancelled it, in which case you need to complete a new Direct Debit Mandate. If you pay by another method and stopped during the payment holiday, you can pay the same way you did previously. For the full list of payment methods and how to set them up, see our Paying your mortgage page.

Options to minimise the change to your monthly payment

These options will allow you to reduce your new monthly payment to approximately the same amount as before you commenced your payment holiday.

You can make a one-off lump sum payment to cover the interest added to your account during the payment holiday and the suspended capital payments. This puts your mortgage in a similar position to as it would have been if the payment holiday had not happened, so your monthly payment could end up close to what it was before. If you want to do this, you can call us on 0345 850 1755.

You can request a term extension of up to three months to help minimise your new monthly payments. This means that your mortgage will continue for longer than originally planned. Your monthly payment will return to a similar amount to what it was before the payment holiday.

If you want to request a term extension complete the form below - please note that we can only extend the term by up to the length of the payment holiday, e.g. if you took a payment holiday of one month you can only extend your mortgage term by one month. We will then complete your request and contact you as soon as we can.

Please note that if your mortgage is on an Interest Only basis, because the length of the mortgage term does not affect monthly payments you are not eligible for a term extension as a result of your payment holiday.

Request a Term Extension
 

If you're worried you won't be able to afford your monthly payment

If you were up to date with your mortgage payments when you requested a payment holiday but your financial circumstances have changed and you are concerned about being able to make your full monthly payment in future, please complete a Personal Budget Form so that we can review your circumstances and consider a suitable option for you.

If you think you can afford part of your payment but not all of it, please detail on the form how much you propose to pay and for how long. It may take us a few days to process your Budget Form so in the meantime, please pay what you can afford and for this period we will not charge you any Monthly Arrears Fees.

Please select a form below depending on whether this is a Residential (your home) or Buy To Let (rental) mortgage.

Residential Budget Form Buy To Let Budget Form

If you were in arrears before the payment holiday

If your mortgage was already in arrears when you requested a payment holiday then one of our Credit Management Team will make contact with you as soon as possible. We are already aware of who we need to contact but please bear with us as we’re extremely busy processing requests and rest assured that you’ll hear from us soon.

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