Imagine you have an active mortgage and you suddenly lose your job or face an unexpected large expense.
A mortgage holiday could let you skip payments for up to 3-6 months, giving you time to get back on your feet.
During the 2020 pandemic, this relief proved to be much needed as payment holidays were granted to about 1.9 million UK mortgage holders (roughly one in six mortgages) at the scheme’s peak.
While that emergency scheme has ended, you can still request a payment holiday from your lender if you’re struggling financially.
It provides short-term relief by letting you skip payments, but it’s not free money as interest still builds up during the break, meaning you’ll end up paying more overall.
In this guide, we’ll discuss how a payment holiday works, its pros and cons, and whether it’s the right option for you.
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What is a Mortgage Payment Holiday?
A mortgage payment holiday is an agreed break from making your monthly mortgage repayments.
It’s a short-term fix designed to relieve financial pressure for borrowers who are dealing with temporary hardships. During the holiday period, you won’t need to pay your usual mortgage instalments.
This can be a lifeline if you’ve hit a rough patch, for example, due to job loss, illness, or another income shock; it frees up cash for essentials and keeps you from falling into immediate arrears.
However, it’s important to note that not all lenders or mortgage deals allow payment holidays. You should check your mortgage terms or ask your lender directly to see if it’s an option.
Many UK homeowners took advantage of a government-backed national mortgage holiday program in early 2020, but lenders are no longer obliged to offer blanket payment holidays, now.
Today, any mortgage holiday must be arranged on a case-by-case basis with your bank, usually as part of their hardship or forbearance options.
How Does a Mortgage Payment Holiday Work?
If your lender approves a mortgage payment holiday, you’ll get a pause on payments, typically for one to six months (in some cases up to 12 months in extreme situations).
During this period, you won’t have to pay your usual monthly mortgage amount. However, interest continues to accrue on your loan even though you aren’t making payments.
In practical terms, the unpaid amounts are added to your mortgage balance, and interest is charged on that larger balance.
This means once the holiday ends, your mortgage will be slightly more expensive: either your monthly payments will go up, or your repayment term might be extended, to ensure the missed payments (plus the accumulated interest on them) are eventually paid back.
Do note that a mortgage holiday must be arranged in advance, and you can’t simply stop paying and call it a holiday. You’ll need to contact your lender, explain your situation, and get their approval.
Lenders usually decide how long the break can last (often as short as possible), and they’ll want to know how you plan to get back on track afterward.
Does a Mortgage Holiday Affect Your Credit Score?
Yes, one of the drawbacks of a mortgage payment holiday is that it has a potential impact on your credit record.
Even though the break is agreed with your lender (so you’re not defaulting in the traditional sense), in most cases, those suspended payments are still reported as missed payments on your credit file.
This can hurt your credit score and signal to future lenders that you had trouble meeting your obligations. In turn, it could affect your ability to get new credit or a remortgage deal later on.
The only exception was during the special COVID‑19 mortgage holiday scheme in 2020, when authorities told lenders not to record those pandemic payment holidays as missed payments on credit files.
Outside of such exceptional measures, any payment holiday will show up on your credit history.
Eligibility and How to Apply for a Mortgage Holiday
Each lender has its own rules on who qualifies for a mortgage payment holiday. Here are some common eligibility criteria and steps:
Your mortgage must allow it: Not every mortgage product permits payment holidays. Check your original loan agreement or ask your lender if this option exists for you.
Minimum time as a borrower: Many lenders require that you’ve had the mortgage for a certain period (often at least 12 months of payments) before you can take a holiday. If you’re a brand-new borrower, you may not qualify yet.
Good payment history: Typically, you need to be up-to-date on payments (not already in arrears) to be approved. If you’ve already missed payments, the lender may refuse a holiday and instead discuss other arrears solutions.
Loan-to-value (LTV) requirements: Some lenders only grant holidays if you have enough equity in your home, for example, if your current mortgage balance is below 80% of the property value.
Previous overpayments or savings: Certain mortgages require that you’ve made overpayments in the past or built up a reserve before you can “draw on” a payment holiday.
Not too frequent: Lenders usually won’t let you take multiple holidays in a short span. Often, you can’t have more than one holiday within a year, or only a few over the life of the mortgage.
Sufficient remaining term: You may need at least a year or more left on the mortgage term after the holiday ends. If you’re close to paying off the mortgage, a holiday might not be possible.
To apply for a mortgage payment holiday, start by contacting your lender’s customer service or hardship team.
Explain your situation early, ideally before you miss any payment. The lender will guide you through their application process.
You’ll likely need to provide information about your finances, such as your mortgage account details, current income and expenses, other debts, and the reason you need the holiday.
They might ask how long a break you’re requesting, though the lender will set the final approved duration.
Alternatives to a Mortgage Payment Holiday
Depending on your situation, there may be alternative solutions to consider as these can sometimes be less costly or better for your credit than a full payment break:
Remortgaging to a cheaper deal
If your financial strain is due to a high interest rate, see if you can remortgage to a lower-rate deal. Check out our remortgage guides to find more information.
With house prices having risen in recent years, you might have more equity, which could qualify you for a better rate and reduce your monthly payments.
Switch to interest-only payments (temporarily)
Instead of stopping payments entirely, ask your lender if you can pay interest only for a while. This means you cover the interest as it accrues, but don’t pay the principal for that period.
Your monthly payment would drop significantly (often to less than half of a full repayment), easing your budget.
Importantly, because you’re at least paying the interest, your mortgage balance won’t grow as it would in a full holiday.
While most lenders usually don’t let residential borrowers go interest-only forever, many will consider a temporary switch to help you through a rough patch.
Under a recent Mortgage Charter in 2023, major UK banks even agreed to let customers switch to interest-only for up to 6 months without it affecting their credit score. This can be a useful alternative to keep the loan on track while giving you relief.
Extend your mortgage term
You can ask to lengthen the term of your mortgage (for example, going from 20 years remaining to 25 years).
This spreads out your debt over more months, which lowers each monthly payment. The downside is you’ll be paying for longer and accrue more total interest over the life of the loan
However, it might be worth it to achieve an affordable payment. Some lenders might let you reduce the term again later when you’re in a better position.
Make partial payments
If you can’t afford the full mortgage amount, see if your lender will accept reduced payments for a short period instead of a full holiday.
For example, you might pay half the amount for a few months. This still leaves a shortfall, but it’s smaller, meaning you’ll have less unpaid balance accruing interest compared to not paying at all.
Partial payments show goodwill that you’re trying to pay what you can, and many lenders prefer this over a complete stop.
Frequently Asked Questions
Can I still get a mortgage payment holiday in 2025?
Yes. Even though the nationwide COVID-19 mortgage holiday program is over, most UK lenders still consider mortgage payment holidays on a case-by-case basis if you’re struggling.
How long can a mortgage payment holiday last?
Typically, a mortgage payment holiday lasts anywhere from one month up to around three or six months. The exact length will be decided by your lender based on your situation.
Do I have to repay the missed payments later?
Yes, you still owe the payments you skipped. The unpaid mortgage amounts from the holiday period are added to your outstanding loan balance (plus any interest that accrued on those missed payments)
Will a mortgage payment holiday hurt my credit score?
In most cases, yes, it can affect your credit. Even though you have permission to pause payments, lenders will usually report those months as missed or deferred payments on your credit file, which can lower your credit score..
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