If you have a variable rate mortgage, then the outstanding amount from your payment holiday will be spread across your remaining term and your repayments after the mortgage holiday period will increase as a result.
What is a mortgage holiday payment?
A payment holiday is a short break from paying your mortgage, which won’t impact your credit rating.
If you think you’ll struggle to make your monthly mortgage payments because of coronavirus, we can help by offering you a payment holiday of up to three months.
While your monthly payment changes to zero, interest continues to build at your usual rate. This means that your loan balance will increase and you may have to pay back more than if you’d not taken out a holiday.
You can apply for a payment holiday if;
- you have a residential or a Buy-to-Let mortgage with us
- you'll struggle to meet your usual repayments due to being impacted by coronavirus
- you have consent from everyone named on your mortgage
- you’re up to date with your monthly payments (if you have fallen behind in your repayments but have been impacted by coronavirus please speak to us).
Is a payment holiday the right option for me?
A payment holiday is a temporary break from your repayments to help you through these uncertain times.
There are a few things to consider before applying for a payment holiday, to make sure it’s right for your situation:
- Currently, we offer payment holidays of up to three months. If you feel that you will need longer term support, or you’re worried about starting your payments again in three months’ time please speak to us.
- If you are not up to date with repayments on other products that you have with us, for example your credit card or personal loan, speak to us.
- If you are a Buy-to-Let landlord, it is expected that you pass the relief from your payment holiday onto your tenants. If you are not in a position to do this, please contact us to discuss other options available to you.
- If you have multiple Buy-to-Let mortgages with us, an adviser may be in touch with you to get extra information to complete your application and discuss your options.
Contact us on 0345 600 2882.
Please be aware that if you need independent support regarding your mortgage, you can get help from Citizens Advice, Housing Rights NI or other debt counselling agencies.
What impact will a payment holiday have on my future monthly payments?
While no monthly payment will be taken during the holiday, interest will continue to build at your usual interest rate during the payment holiday and the total amount of interest you pay over the term of the mortgage will increase.
We’ll need to recalculate your payments over your remaining term, taking this increase into account.
The amount your payment will increase depends on your mortgage balance, mortgage term and interest rate.
Here are some examples of how mortgage payments could change after taking out a three month payment holiday.
If you have a variable rate mortgage
If you have a fixed rate mortgage
If you have a fixed rate mortgage, there will be no change to your fixed payments after the payment holiday, unless you contact us to change to advise that you would rather repay it during your fixed rate period. If you do not change this arrangement and you move on to a reversionary rate (SVR or Danske Follow-on Rate) after your fixed rate period ends, then these payments will be higher than shown in your original mortgage agreement.
What happens when the payment holiday ends?
Towards the end of the payment holiday, we will write to you to confirm that the payment holiday is ending. If you are not able to resume full repayment of your mortgage at that stage, we will discuss other options with you and agree next steps. We can also discuss other options for repaying the amount owed from your payment holiday, for example making a lump sum repayment.
How quickly is a mortgage payment holiday request processed?
Where we can, we’ll start your next payment holiday from your next payment. However, if your next payment is due in the next three to five working days, your payment holiday may start the following month.
If your payment is due in the next few days and you will have difficulty making it, please contact us on 0345 600 2882.
Unfortunately we can’t process requests for payment holidays to start beyond your next repayment, as they should generally commence immediately. Please only apply if you want the payment holiday to start with your next mortgage repayment. Please contact us if you would like to discuss this.
What happens once I apply?
We’ll write to you with further details and to confirm when your payment holiday will start. You will need to cancel your standing order for your mortgage payment if you pay from another bank.
How long will the payment holiday option be available?
The Government has advised that it will review the guidance on payment holidays in three months’ time, so the scheme is expected to remain open until mid-June. This is an unprecedented situation and the guidance could be updated at an earlier stage but please don’t worry, we will still be able to help you.
What other options do I have if I don’t want a payment holiday?
If a payment holiday isn’t right for you there are other options available:
With a Capital Moratorium you’ll pay interest only payments for a period of up to six months, meaning you won’t be reducing the amount you owe. This would reduce your mortgage commitment each month, but will still allow you to continue to pay the interest portion of your mortgage.
Or you can make partial repayments instead of taking a payment holiday. This means you will still cover the interest portion of your mortgage repayments and reduce the amount you owe by making smaller reductions to the amount you owe.