What to do when your coronavirus mortgage payment holiday has ended

If you took out a mortgage payment holiday because of coronavirus that’s now ended, it’s a good idea to get on top of the options available to you, especially if you’ve suffered a severe income drop.

What happens when your payment holiday is over?

Just before your payment holiday ends, your lender should contact you to ask how you’re planning to make up the shortfall.

Get in touch with your lender as soon as you can, and well before your holiday payment period is due to end. This is particularly important if you’re not sure you’ll be able to make future repayments.

In most cases, when your payment holiday ends, your lender will recalculate your monthly payments and spread any deferred payments over the outstanding term of your mortgage. They might also discuss other ways in which you can repay.

What options might your lender consider

Mortgage payment holiday

Your lender may be able to give you a further payment holiday but this would impact on your credit score and could affect your ability to borrow money in future

Increasing the length of your mortgage term

Extending the length of your mortgage means you might see a smaller increase in your monthly repayments. This might be an option to consider if you’re worried about your income falling in the future.

However, you will be paying your mortgage back over a longer period, which means you will be paying more in interest payments.

Making interest or capital-only payments

your lender may be able to allow you to make only partial payments on your mortgage whilst you continue to experience financial difficuties. 

But you’ll still eventually need to repay any shortfall in your normal monthly payments. This option might also affect your credit score.

If your financial situation gets worse

Talk to your mortgage lender about changing the repayment options you’ve agreed. For example, you could ask to take another payment holiday.

However, this could impact your credit report so make sure you understand the implications before you decide.

Make sure you're getting all the income support you're entitled to from government schemes and benefits

Make an emergency budget

If you’re worried about cashflow, have a look at what you’re spending and what income you have coming in.

Look at how to cut your household bills, such as switching providers for your gas, electricity or mobile phone contracts.

If you’re worried you’re going to miss payments or are already in arrears

Your mortgage is a priority debt. This means the consequences of not paying it are more serious than other debts.

If your income drop means you’re unlikely to be able to meet payments, it’s important that you talk to your lender as soon as you can.

If you’re already in arrears

If you’ve already missed payments and are not able to come to an agreement with your lender, get debt advice as soon as possible – particularly if you have other debts as well.

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Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
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Whatever your circumstances or plans, move forward with MoneyHelper.

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