What is a mortgage payment holiday?
Essentially, a mortgage payment holiday is an agreement you can make with your lender that allows you to temporarily stop or reduce your monthly mortgage repayments. Whether you are eligible to take a payment holiday, for how long and the conditions you must meet first will depend on your mortgage deal and your circumstances. For instance, many flexible mortgages allow payment holidays at any time, and you don’t even have to tell the lender why. Some traditional mortgages also allow payment holidays, but many will insist that you make overpayments before you are eligible. That means paying more than your agreed monthly payments until you have built up sufficient credit to take a break from payments. Lenders may also offer home owners the chance to reduce or suspend mortgage payments if they are struggling to meet the monthly cost, for instance following redundancy. This is usually at the discretion of the lender, however, around 70% have signed up to a scheme that will enable people in
A mortgage payment holiday means your lender will let you off your repayments temporarily, reducing your monthly outgoings and giving you some valuable breathing space. You might ask for a holiday when you’re faced with unexpected expenditure, or perhaps when you change your job, you are made redundant, take a career break or go on maternity leave. That sounds great in theory, but there are certain rules on when you can apply, how long the holiday will last and, most importantly, how much extra it will cost you. But before we look at that, it’s important to know that not all lenders offer payment holidays. HSBC, for example, will allow borrowers to make underpayments, but this will generally only be agreed if an overpayment has previously been made.
