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The cost of taking a mortgage payment holiday revealed

Up and down the country people continue to feel the impact of coronavirus on their finances. Millions of homeowners have taken advantage of the government's mortgage holiday scheme, with the latest data revealing one in six mortgages* are now covered by a payment holiday.

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However, new figures from money.co.uk and its mortgage technology partner Koodoo reveal while a three month mortgage holiday only adds on average just £11.21 per month to a mortgage, the debt builds up over time and could add £665.08** to a mortgage.

On average, homeowners looking for help with their mortgage payments have an outstanding loan of £136,000. Taking a three-month mortgage holiday would see their regular monthly payments jump by £11.21 to £720.22 and based on an average 21-year term, this would cost an additional £665.08

At the time of the analysis homeowners could take a maximum three month mortgage holiday and the vast majority (89%) of homeowners were opting for this, over the shorter term breaks of one or two months..

With the scheme now extended to six months, the personal finance experts at money.co.uk crunched the numbers and calculated that taking the additional three month mortgage holiday, could add an additional £1,331.95 (£22.70 per month) to the full amount owed.

Salman Haqqi, personal finance expert at money.co.uk, said “Mortgage holidays have proved to be a lifeline for millions of homeowners, who would have otherwise struggled to meet their payments and may have faced losing their homes. 

“However, our findings show that payment holidays should be a short term fix. It’s important to remember that you will still owe the money and interest will continue to accrue while the deferred payments remain unpaid. And in most cases when a customer takes a three month payment holiday in a 21 year or 252 month mortgage, the end date of the mortgage doesn't get automatically extended, so the customer now needs to pay back the mortgage in 249 months.

“As the nation gradually starts to open for business and furloughed workers are brought back, restarting mortgage payments should be a priority. And, if you are still able to make your payments in full, you should continue to do so”


Notes to editors

* UK Finance figures https://www.ukfinance.org.uk/press/press-releases/lenders-are-committed-to-providing-ongoing-support-to-those-borrowers-that-are-impacted-by-Covid-19

** Analysis of Koodoo data by money.co.uk.· The calculation  is based on the assumption that a customer is taking a 3 month payment holiday, and the interest and principal payments during the payment holiday are recapitalised into the loan, and that the customer continues to pay their current interest rate (2.72% in this example) for the remainder of their entire mortgage term.

About money.co.uk

Money.co.uk is one of the UK’s leading comparison websites for financial services. We help consumers compare mortgages, loans, credit cards, bank accounts and insurance from more than 200 providers.

money.co.uk is owned by RVU, which also owns Uswitch.com and Bankrate.


About Salman Haqqi

Salman is our personal finance editor with over 10 years’ experience as a journalist. He has previously written for Finder and regularly provides his expert view on financial and consumer spending issues for local and national press.

View Salman Haqqi's full biography here or visit the money.co.uk press centre for our latest news.