Payment Holiday

What is A Payment Holiday?

A Payment Holiday is a feature offered by some mortgages that allow you to miss the occasional monthly payments on a mortgage.

Payment holidays allow you to stop your mortgage repayments for an agreed period. They are however normally only allowed subject to certain conditions; if you have been a customer for a set period of time, have a good record of making repayments and owe less than a specified percentage of the original mortgage.

A mortgage payment holiday allows you to take time out from the financial burden of repayments. It might be you plan to go travelling round the world or are changing jobs or are starting a family. With the agreement of your lender you stop making payments on your mortgage for a set time period while you sort out your finances.

Beware – a few lenders record this on your credit report as an arrangement to pay which has serious consequences on your credit score and chances of getting credit for 6 years – ask for clarification on how this will be recorded on your credit report before you take advantage of it.


Q: How do I take a mortgage holiday?

A: The first step is to check that you’re allowed to take a break with your current mortgage. Second, you’ll want to see how your mortgage lender deals with the repayments to make up for the time you’ll be paying at a reduced rate. This will normally be in the form of increased costs before or after the holiday period. If you cannot afford these costs, it may be worth thinking about finding a mortgage with a cheaper rate.

Your bank might ask for several months’ notice before the start date for a mortgage holiday.

Q: How does it affect my credit score?

A: A few lenders record a mortgage holiday on your credit report as an arrangement to pay which could have serious consequences on your credit file for the six years the marker remains there.

Always ask for clarification on how this will be recorded on your credit report before you take advantage of it.

Q: How long can they last?

A: Depending on your provider and your eligibility, holiday periods can last anywhere up to 12 months.

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