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Homeowners who’ve had their finances affected by coronavirus may still able to pause their mortgage payments during lockdown.

Mortgage payment holidays had been due to end last month, but in light of the new restrictions announced across England, the scheme has been extended by the government.

This means that people who’ve not yet had a mortgage holiday can request a pause in repayments from their lender – which can last up to six months.

Equally, homeowners who’ve taken advantage of the scheme already, can now extend their mortgage holiday until they reach the six-month limit.

During this period, however, interest will still accrue on what borrowers owe. The deadline for deferral applications will be extended to 31st January 2021.

An initial three-month mortgage payment holiday scheme was introduced back in March as the country entered the first full lockdown.

It was then extended for a further three months, and will now remain available into next year.

What is a mortgage payment holiday?

This is an arrangement between you and your mortgage lender and allows you to either temporarily reduce your mortgage repayments or stop them altogether for a certain period.

The option of a mortgage payment holiday will depend on the terms and conditions of your specific mortgage agreement, however.

To find out more about mortgage payment holidays, read our article here.

What are the specifics of the mortgage holiday extension?

The Financial Conduct Authority (FCA) revealed plans to extend the availability of payment holidays on 2nd November.

They explained that:

  • If you’ve not yet taken out a payment holiday, you’ll be eligible for two payment deferrals up to a maximum of six months in total
  • If you currently have a payment holiday in place, you’ll be able to apply for one further three-month deferral
  • If you’ve resumed repayments after a payment holiday, you’ll be eligible for another three month deferral
  • If you’ve already had two three-month payment holidays, or have agreed alternative support with your lender, you won’t be eligible for a further deferral

How can I claim for a mortgage holiday in lockdown?

First of all you should contact your lender directly to find out if you’re eligible.

Explain your situation to them over the phone. For example, if you’re self-employed and have had to apply for emergency benefits such as employment support allowance, make this clear.

Whether or not you’re eligible to take a payment holiday, for how long, and the conditions you must meet first will depend on your lender, your mortgage contract, and your personal financial circumstances.

Everyone is in a different financial situation, and so this will vary from case to case.

However, you shouldn’t ever simply cancel your monthly direct debit.

This is because if you do cancel it, this will be considered a missed payment rather than a payment holiday, which could potentially affect your chances of remortgaging or borrowing further in the future.