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Mortgage payment holidays – your questions answered

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A mortgage payment break of up to three months is available for customers who are affected by the current situation due to the coronavirus. The following questions and answers are there to help you to determine if a payment holiday may be right for you.

What is a payment holiday?

With a payment holiday you will not have to make any monthly mortgage payments for a set amount of time, in this case up to three months. 

However, it’s important to remember that you still owe that money and that interest on your mortgage and these outstanding payments will still accrue during a payment holiday. 

At the end of the payment holiday your branch will contact you to assess your circumstances and agree a manageable way for you to make the deferred payments. We also recommend discussing payment of the additional interest at this time too.

How do ‘payment holidays’ work? 

The mortgage payment is deferred for an agreed period. The monthly payment changes to zero, with interest continuing to accrue for this period. This may be particularly appropriate where there is a temporary shortfall of income.

However, this is not a solution where, because of a permanent reduction in income, you are unable to afford anywhere near the full mortgage repayments and there is little prospect of an improvement in the situation in the foreseeable future.

Where repayments are deferred for a time, you will need to make up these repayments in the future, which could be over the remaining term. 

Will I be eligible for a payment holiday? 

To be eligible for a payment holiday you will need to contact your branch to let them know of your current circumstances. 

If we have already agreed a specific payment arrangement with you, we can discuss with you the most appropriate solution for your current circumstances going forward.

If you are a Buy-to-Let landlord who owns three properties or fewer, a payment holiday will be available if your tenants have been impacted by the coronavirus.

There a number of options available and payment holidays aren’t always the most appropriate solution for everyone. Please speak to your branch, where they can discuss your situation with you and ascertain if there is another, more appropriate, solution available.

You should not apply for a mortgage payment holiday if you are not experiencing, or do not expect to experience, payment difficulties. 

Will I receive an automatic three-month payment holiday?

Payment holidays will not be applied automatically, so please do not cancel your Direct Debit without speaking to us first. If you cancel your Direct Debit, it is not a payment holiday and it will be counted as a missed payment.

If you feel you would benefit from a payment holiday, please contact your branch who will discuss your situation with you and respond to your request. Please see the below section 'How do I apply?' for more information.

How do I apply?

If you are concerned about making your mortgage payments during this time you should contact your branch as soon as possible. You do not need to provide any documentation; you will just need to self-certify that your income has been either directly or indirectly impacted by the coronavirus.

If you are a Buy-to-Let landlord, you will need to self-certify that your tenant’s income has been impacted by the coronavirus. Landlords are expected to pass on this relief to their tenants to ensure that they are supported during this time. 

At the end of the payment holiday we will contact you to assess your circumstances and agree a manageable way for you repay the interest charges incurred and make up the deferred payments. 

How long will it take for you  to process my application?

We are doing our best to support our customers during these unprecedented times. Requests will be dealt with as quickly as possible, but please bear with us. 

If I take a payment holiday what will happen to my credit score? 

There will be no impact on your credit score if you need to take a payment holiday due to the impact of the coronavirus.

Do the announcements apply across the UK?

Yes, they apply across England, Scotland, Wales and Northern Ireland.

What if I am likely to need support longer term or help to recover to my previous position after the payment holiday expires? 

While the payment holiday is in effect, the capital sum of the loan remains as is, while the interest that would have been paid in the period accrues. 

At the end of the payment holiday period, your branch will get in touch with you to assess your circumstances, including completing an income and expenditure form, in order to agree an arrangement with you to bring your mortgage up to date. 

If you are in financial difficulty and the three month repayment holiday is not going to be sufficient to help you over that period, we can review your wider financial position and look to find a solution that works for you. As in any similar situation, we will agree an arrangement to ensure you are able to sustain payments on the mortgage whilst you review your current circumstances, to look to remedy your situation.