Mortgage payment holidays

Updated 3:00pm on Tuesday 1st September 2020

You’ll receive a letter to let you know your mortgage payment holiday has ended. It will confirm your new monthly mortgage payment and when this is due.

How did we calculate your new monthly mortgage payment?

Whilst payments are suspended during your mortgage payment holiday, interest is still charged on your mortgage balance. To make sure your loan is paid off in the time left on your mortgage, we had to recalculate your monthly mortgage payments.

Comfortable with your new monthly payments?

If your new monthly mortgage payment is affordable, then all you need to do is start making payments from the date shown. Unless you’ve cancelled your Direct Debit, payments will start automatically.

If you’ve cancelled your Direct Debit, however, you’ll need to set this up again. You can do this by completing and sending us the Direct Debit Mandate or by calling us on (freephone) 0800 072 8738.

If you paid in any other way before your mortgage payment holiday, you need to re-start in the same way or set up a Direct Debit for your new monthly payments. You’ll find more details about how to make mortgage payments here.

If your account was in arrears before your mortgage payment holiday, we’ll be in touch to discuss repayments that are affordable to you.

Worried about your new monthly payments?

If you’re unable to make your new monthly mortgage payments – or worried about future payments – there are other options available. The first place to start, however, is with a budget planner...

How a budget planner can help

Before you consider any of the available options, our budget planner can help you see where your money is going and prioritise your most important debts.

  • You can see just where you stand with your finances.
  • You’re able to make a more informed decision about what your next step should be.
  • You may have excess money which can help pay the cost of your mortgage payment holiday.

We’ve also put together a useful guide which contains tips, information and if needed, links to debt advice agencies. You may also find these guides from the Money Advice Service and FCA useful.

If you’re struggling with debt payments, we recommend you get in touch with all creditors to discuss which options are open to you. Once you’ve completed your budget planner – and prioritised your outgoings – you can check whether you’re able to afford your new monthly mortgage payments. If you’re still concerned, we have a number of options available to help.

Which other options are available to me?

Once you’ve completed your budget planner, find out more about which options best suit your situation.

I’ve used my full six months’ mortgage payment holiday and may have difficulty with future mortgage payments

I’ve used less than six months’ mortgage payment holiday and may have difficulty with future mortgage payments

I’m comfortable with my new mortgage payments but would like to minimise the amount they’ve changed

Completed six months’ mortgage payment holiday

If you’ve used your full six months' mortgage payment holiday allowance, there are still a number of options open to you.

Check you’re on the best mortgage for you

Currently on our standard variable rate? There may be a lower rate deal available that you can switch to. You can find out how to do this here.

Use any overpayments you’ve made

It may be you’ve previously made overpayments on your mortgage. To talk to someone about using this to reduce your monthly mortgage payments, call us on (freephone) 0800 072 9739. Until you’ve spoken to us, please continue to make your payments as normal.

Extend the term of your mortgage

If you can afford a similar amount to your old monthly mortgage payment, you may want to consider extending the term of your mortgage. You can do this for the same amount of time as your mortgage payment holiday ran for.

Please bear in mind, this is a long term option. It will cost more over the length of your mortgage compared to making your new monthly payments. You can find more information here.

Concerned about your future income?

There could still be a number of options open to you which we're happy to talk you through. You can find out more about these options here.

If you’re worried about a longer term loss of income and being able to meet the cost of your mortgage payments, please call us to discuss your options.

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0800 072 9739

Used less than six month’s mortgage payment holiday

If you’ve used less than your six month mortgage payment holiday allowance, there are a number of options open to you.

Check you’re on the best mortgage for you

If you’re currently on our standard variable rate, there may be a lower rate deal available that you can switch to. You can find out how to do this here.

Use any overpayments you’ve made

If you have previously made overpayments on your mortgage, and would like to talk to someone about using this to reduce your monthly mortgage payments, please call us on (freephone) 0800 072 9739. Please continue to make your payments as normal until you have spoken to us.

Extend the term of your mortgage

If you want to extend the term of your mortgage, this offers a longer term option if you can afford to pay a similar amount to your old mortgage payment. Please bear in mind it will cost more over the term of your mortgage, when compared to making your new monthly payments. You can find more information here.

Full and part extensions to your mortgage payment holiday

If your finances are still affected by coronavirus, you can take a full or part extension to your mortgage payment holiday. Just let us know at least three working days before your next mortgage payment is due.

It’s important to remember that throughout your mortgage payment holiday, interest will continue to build up at the rate shown on your account. This means you’ll pay additional interest over the term of your mortgage.

For an example of how your monthly mortgage payments could change, please visit the online calculator at MortgageHoliday.co.uk. This could help you decide whether a mortgage payment holiday is right for you. If you then decide to apply for a mortgage payment holiday, you’ll need to use it again.

If your account is in arrears, any payments received will be used to clear these up first. If you don’t make any payments during your mortgage payment holiday, arrears will remain unchanged.

Before you use the calculator

You’ll need some basic information such as your:

  • loan balance.
  • remaining mortgage term.
  • interest rate.

You can find all of these on your annual mortgage statement.

Please bear in mind that when you use the online calculator, it will make calculations based on the same rate of interest across your whole mortgage. This won’t apply, however, if your mortgage is made up of different types of loan with different rates of interest. For instance, if you have taken out additional borrowing or part of your mortgage is Interest Only. If this is the case, you’ll need to contact us on the details shown below.

We’ve also put together our own examples of how a mortgage payment holiday affects monthly payments and the overall total cost. You can find these here.

If you’re able to make any mortgage payments during your mortgage payment holiday - a ‘partial mortgage payment’ holiday - you should. This will help reduce the overall cost of your mortgage in the long term.

Before taking steps to extend your mortgage payment holiday, it’s important to:

  • Wait until you’ve received a letter confirming the end of your current mortgage payment holiday. Have this letter and your annual mortgage statement to hand as they will help you with the online calculator that’s part of the application process.
  • Complete our budget planner, which will help you work out your income and expenditure as well as identify your priority debts.
  • Ensure you have consent from everyone named on the mortgage.

Available until October 31st 2020

  • You have until October 31st 2020 to apply for a mortgage payment holiday extension.
  • If your previous mortgage payment holiday was for one to three months, you can now opt for an extension of up to three months.
  • Worried your mortgage payment holiday won’t be long enough to meet your needs? Please call us on (freephone) 0800 072 9739 to go through your options.

To request a full or partial mortgage payment holiday extension

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Use our online form if you pay by Direct Debit and:

  • - Were up to date with your mortgage before your mortgage payment holiday.
  • - Or were less than one month in arrears before your mortgage payment holiday.
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Call (freephone) 0800 072 8738 if you don’t pay by Direct Debit or:

  • - Your mortgage is made up of more than one part. (For example, part repayment part interest only, or you’ve taken additional borrowing on your mortgage.)
  • - You’d like to talk to someone before you take out a mortgage payment holiday.
  • - You’ve taken less than three months’ mortgage payment holiday.

Call (freephone) 0800 072 9739

  • - If you were over one month in arrears before your mortgage payment holiday.

Mortgage payment holidays and your credit file: Taking a mortgage payment holiday in these circumstances won’t have a negative impact on your credit file. You should bear in mind, however, that some lenders may take into account other information when making future lending decisions. For example, this could include details provided by applicants or bank account information.

Concerned about your future income?

If you’re worried about a longer term loss of income and your ability to make your mortgage payments, please call us on (freephone) 0800 072 9739 through your options, including looking at a mortgage payment holiday extension.

Still unsure?

If you are still unsure which option is right for you, please call us on (freephone) 0800 072 9739 to talk things through.

Minimising the change to your monthly mortgage payments

There are several option to consider when looking for ways to minimise the change to your monthly mortgage payments.

Making a lump sum payment

By making a lump sum payment to cover some or all of your mortgage payment holiday, you’ll reduce the amount of interest you have to pay. In the unlikely event this payment comes with an early redemption charge, please contact us and we will arrange for it to be refunded.

You can find out more about how to make a lump sum payment here. Please bear in mind that although making a lump sum payment will reduce the overall interest amount, it won’t always mean your monthly payment is recalculated straight away. For example, if you are on annual review or if the lump sum payment is less than £1,000.

If you want to talk to someone about the difference a lump sum can make - or would like to request a recalculation for your monthly payment - call us on (freephone) 0800 072 8738.

Making overpayments

In addition to your usual monthly payment, you can make overpayments. They can repay the cost of all or part of your mortgage payment holiday. This will reduce the additional amount of interest you have to pay over the length of your mortgage.

To make an overpayment, you can call our Contact Centre on 0345 0505075 or pop into your nearest branch.

Check you’re on the best mortgage for you

If you’re currently on our standard variable rate, there may be a lower rate deal available that you can switch to. You can find out how to do this here.

Extend the term of your mortgage

If you’re looking to lower your new monthly payments, extending the term of your mortgage may be worth considering. You can do this for the same amount of time as your mortgage payment holiday ran for.

Please bear in mind, this is a long term option. It will cost more over the length of your mortgage compared to making your new monthly payments. If you can afford to, sticking to your new monthly mortgage payment is more cost efficient than extending the term. If you are not able to afford your old monthly mortgage payments, you can find information on the other options we have to help here.

Please note, if your mortgage is Interest Only, you’re not eligible for a term extension following a mortgage payment holiday. This is because monthly payments aren’t affected by the length of the mortgage.

How extending your mortgage term affects monthly payments

The example below shows what happens when a mortgage term is extended by the same length as a mortgage payment holiday. You can see how this affects both monthly payments and the overall cost of your mortgage. Whilst monthly payments remain similar to before the mortgage holiday, the total amount payable increases.

You have 10 years left on your mortgage with a balance of £100,000, you are on a fixed five year rate of 1.88%, followed by our Standard Variable Rate of 5.29%:

  • If you didn't extend your mortgage term after taking a three month mortgage payment holiday, your monthly payment would increase from £914.14 to £939.83. The total amount you repay would be £114,773.31, an increase of £400.71 in interest.
  • However, if you did decide to extend your mortgage term by three months, your new monthly mortgage payment would broadly be in line with your old payment at £918.42. The total amount you repay would be £115,338.60, an increase of £966.00 in interest.

The figures are meant as a guide only. They may vary due to individual circumstances and mortgage products taken out during the life of your mortgage. You can find further examples of how this works here.

If you are considering applying for a term extension?

It’s important to wait until you’ve received a letter confirming the end of your mortgage payment holiday. This will show your new monthly mortgage payment and help you understand your options.

To apply for a term extension

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If you pay by Direct Debit and are:

  • - Up to date with your mortgage
  • - Or less than one month in arrears

You can apply using our online form.

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If you don’t pay by direct debit and:

  • - your term extension will take you into retirement.
  • - you have a Shared Ownership or Shared Equity mortgage.

Please call us on (freephone) 0800 072 8738 to discuss your term extension request.

If you are currently over one month in arrears:

Call us on (freephone) 0800 072 9739 so we can review the options open to you

Still unsure?

If you are still unsure which option is right for you, please call us on (freephone) 0800 072 9739 to talk things through.