Covid-19: Things to consider before applying for a mortgage payment holiday

So what should you consider before applying for a mortgage payment holiday. We have all the tips for you in this latest blog.


Monthly mortgage payments are for many people the single largest fixed cost every month. The recent promise by the chancellor to implement payment holidays of up to three months for those who are struggling financially as a result of the corona-virus may have been welcomed.

However, there are some important things to evaluate before looking at this as an option.

The mortgage holiday will be a great help for those in cash flow difficulty but do note, this is not free money. Your lender is likely to spread your outstanding payments over the outstanding term of your mortgage, so you will see an increase in your monthly mortgage payments. The longer term effects of this should be considered. It is thus also likely the overall amount of interest paid on the remaining term of the mortgage will also increase.

The biggest positive of a mortgage holiday is the immediate relief of pressure. Perhaps your circumstances mean only a temporary drop in earnings. In such a situation a mortgage holiday may be useful.

The negatives can include the following;

  • While you are not making mortgage payments, you’re still racking up interest on your remaining mortgage balance.
  • When the payment holiday comes to an end, your outstanding mortgage balance and mortgage payments will be higher than they were before the holiday.

Specific criteria may differ from lender to lender and so the first step would be to contact your lender and speak to them.


AJN Accountants are specialists in helping contractors, freelancers and small businesses to save tax and time.

Please contact us for more information:

E: info@ajnaccountants.co.uk
T: 020 3488 2435

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