Mortgage Payment Holiday Cost Calculator

A mortgage payment holiday (also called a mortgage deferral) allows you to temporarily pause or reduce monthly payments with your lender's agreement. Interest continues to accrue on the outstanding balance during the holiday, increasing your total debt.

On a £200,000 mortgage at 5.5%, a 3-month payment holiday accrues approximately £2,750 in interest. This increases your balance and future monthly payments slightly. The long-term cost (total extra interest) is £3,000–£5,000 depending on remaining term.

If formally agreed with your lender, payment holidays do NOT affect your credit score — lenders report these as approved arrangements, not missed payments. Unsanctioned missed payments severely damage credit ratings. Always contact your lender first.

Most lenders offer payment holidays to customers in genuine financial hardship. Requirements vary: some require a minimum period of good payment history (typically 12 months), some require the mortgage to not be in arrears. Call your lender's hardship team.

Interest continues to accrue daily on your outstanding balance during the holiday — you're not avoiding interest, just deferring it. The unpaid interest is added to your balance, which is why your total mortgage debt increases.

Typically up to 6 months per application. During the 2020 COVID-19 period, some lenders offered extended 9–12 month payment deferrals. Outside emergency schemes, most lenders limit standard payment holidays to 3–6 months.

Yes: payment reduction (pay interest only, not capital), term extension (lower payments, more interest over longer period), overpayment in good times to build a buffer, government-backed support schemes, or seeking a mortgage advisor for restructuring options.

Yes — by default, most lenders extend your term to maintain the original payment amount. Alternatively, they may slightly increase your monthly payments after the holiday to clear the accrued interest. Confirm which approach your lender uses before agreeing.

These terms are often used interchangeably. A 'deferral' typically means the missed payments are added to the end of the mortgage. A 'payment holiday' may mean payments are reduced or waived temporarily with interest added to the balance. Check your lender's specific terms.

If you have accessible savings earning less than your mortgage rate, using savings is mathematically better — you'd save the mortgage interest rather than paying it. However, if savings are for emergencies or earning more than mortgage rate, a payment holiday may be preferable.

Multiple payment holidays in a short period raise concerns for lenders and may impact future mortgage applications. Most lenders allow one or two payment holidays in the mortgage lifetime. Frequent deferrals signal financial difficulty.

Contact your lender immediately — they're legally required to treat customers fairly and consider forbearance options. Also contact MoneyHelper (0800 011 3797) for free advice, check eligibility for mortgage interest support through DWP, and consider speaking to a debt adviser.