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Understanding The Concept Of A Mortgage Payment Holiday

There is no doubt that the finance industry has changed a lot, and it is much more liberal than the previous years. The amazing thing is that even the mortgage products are now backed-up with the facilities that bring the customers/borrowers in the center of attention.

The concept of mortgage payment holiday is not new, but many people are still unaware of its basics. Just like any financial need, the requirement of a mortgage/property loan may arise anytime. All you people out there may make plans anytime to buy a property. Knowing about the things in advance is proper to fill your bucket of financial literacy.

Here are the essential points about the mortgage payment holiday:

Meaning Of Mortgage Payment Holiday

A mortgage payment holiday is a duration in which you do not pay the mortgage installments. To attain this duration, it is necessary to get into a legal agreement with your lender.

In what circumstances you get the holiday on a mortgage payment

This type of facility is usually attained when the borrower is having a tough time in finances. Any money crisis or any situation like losing a job, illness, etc. can put the loan bearer in difficulty. At that time, he can ask the lender to allow him a mortgage payment holiday.

On what basis lender provides it and for how long?

There are some essential points which a mortgage company considers before providing a payment holiday. These are –

  • Payment history of the borrower in mortgage installments
  • The recent financial behavior
  • The future possibilities of income stability
  • The documents of the current situation, for example – if the illness is the reason, the lender needs the medical certificates as proof.

If you talk about the duration, most of the lenders keep the maximum length of up to 6 months. Besides, the final decision can always vary from one lender to the other.

Pros and Cons of mortgage holiday

Not everything about the mortgage holiday is glittery; also not every factor about it is negative. Just like the two sides of a coin, there are pros and cons to the payment holiday.

  • It gives a sudden relief for some time, and the balance of monthly budget can be attained back
  • You can use the time to pay off the other small debts
  • It gives you the chance to consider other options in the market that are cheaper and good for a remortgage.
  • Holiday keeps adding the interest to the upcoming months when you will start paying again.
  • The total outstanding balance becomes higher as you did not pay for several months. This
  • It negatively affects your credit score because the borrowers usually take a holiday due to financial issues. It keeps you from qualifying for funds in the future.

Can a borrower who has got into a poor credit situation get the mortgage payment holiday?

Usually, it is not considered competent to offer any facility to a borrower with a bad credit situation. However, in the case of a mortgage payment holiday, the situation is different. After all, it is mostly provided to the borrowers in a financial mess. It tells that giving a holiday on the mortgage for bad credit people is possible in the UK. However, the borrower should make sure that his bad credit situation is not consistent and has occurred due to a recent reason.

What is necessary to do before applying for the holiday?

Some conditions are necessary to fulfill to get the relief time of not paying the installments.

  • You need to make timely and regular payments for a minimum duration before you apply for the mortgage payment holiday. This minimum duration may vary from one mortgage provider to the other. Some have the condition of the last 6 months, and some have 12 months, etc.
  • You should be in a job while you apply, the lender may even ask you to provide the salary slip of the previous two to three months. A lender needs to ensure that the holiday period will not face the consequences of delayed payments once it gets over.
  • Your guarantor should not be in poor credit for the financial situations as in the case of any mess the lender will contact your guarantor only.


The mortgage payment holiday is an excellent feature to avail of, but it should be exploited with all the necessary factors in mind.

Author’s note – Know about the basics of mortgage payment holiday to explore the support it brings for a borrower. How to apply, when to apply, get answers to all the elemental doubts.


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