What is a Mortgage Payment Holiday

What is a Mortgage Payment Holiday

Understanding what a mortgage payment holiday entails can be crucial for homeowners facing financial challenges. Essentially, a mortgage payment holiday is an agreement you reach with your lender allowing you to temporarily halt your mortgage payments during times of financial hardship.

Mortgage payment holidays can be a lifeline when you're dealing with unexpected financial strain such as job loss, illness, or any other significant life event that impacts your ability to meet your regular payment commitments. However, it's important to approach this option with a full understanding of its implications and conditions.

Throughout this article, we'll dissect the concept of a mortgage payment holiday, explore how it works, examine its potential advantages and disadvantages, and help you understand whether it’s the right move for your financial situation.

What Exactly is a Mortgage Payment Holiday?

A mortgage payment holiday is a period agreed upon by you and your lender where you are allowed to take a break from making mortgage repayments. These breaks can last anywhere from one month to a year, depending on the lender's policy and your specific circumstances.

It's vital to note that a mortgage payment holiday is not a waiver but a deferment. This means that you're not skipping payments entirely; you're simply delaying them. The missed payments are typically added to the outstanding balance of your mortgage, which can slightly increase the amount of interest you’ll pay over the term of your loan.

How to Qualify for a Mortgage Payment Holiday?

Eligibility criteria for a mortgage payment holiday vary between lenders. Usually, you'll need to have made consistent payments on your mortgage for a certain period and not have exceeded a pre-determined level of arrears. You will also likely need to provide evidence of your financial hardship and demonstrate that you’ve explored alternative options.

Before agreeing to a mortgage payment holiday, most lenders will require that you speak with them to discuss your situation. This conversation allows them to assess your financial state and present a tailored solution that won't put you under more financial stress in the long term.

Advantages of Taking a Mortgage Payment Holiday

The primary advantage of opting for a mortgage payment holiday is immediate financial relief. During the payment holiday, you can allocate your income towards other pressing financial obligations without the looming concern of your mortgage payment.

Moreover, a mortgage payment holiday could help you avoid falling into arrears with your lender, which would negatively affect your credit score and make borrowing more difficult in the future.

Disadvantages of Mortgage Payment Holidays

While a mortgage payment holiday offers short-term respite, it’s not without its consequences. The interest on your mortgage will continue to accrue during the payment holiday, potentially increasing the total amount you owe. Consequently, once the payment holiday ends, you might face higher monthly payments or a longer mortgage term.

Additionally, not all mortgage providers allow for payment holidays, and some that do may report them to credit reference agencies, which could potentially impact your credit rating.

Things to Consider Before Applying for a Mortgage Payment


1. Evaluate Your Financial Position: Critically assess your finances to determine if there are any other adjustments you can make to your budget before requesting a mortgage payment holiday.

2. Explore Alternatives: Investigate other relief options, such as government assistance programs or refinancing your mortgage, which might offer a more sustainable solution.

3. Communicate with Your Lender: Engage in an open and honest dialogue with your mortgage provider to fully understand the terms and discuss how a payment holiday might affect your mortgage.

4. Long-Term Impact: Remember to consider the long-term repercussions of a mortgage payment holiday on both your repayments and overall mortgage term.

5. Professional Advice: It can be beneficial to seek advice from a financial advisor or housing counselor who can provide personalized guidance based on your circumstances.


A mortgage payment holiday can undoubtedly offer much-needed breathing space during financial difficulties, allowing homeowners to navigate through temporary economic challenges without the added pressure of impending mortgage payments. However, the decision to take a mortgage payment holiday should never be taken lightly. It’s essential to weigh the immediate benefits against potential long-term costs, like increased interest and extended loan terms.

As with any financial decision, the key lies in thorough assessment, clear communication with your lender, and an acute awareness of the implications on your financial health. By considering your options carefully and seeking professional advice where needed, you can ensure that a mortgage payment holiday works effectively to your benefit and positions you for a successful financial recovery.

This article was contributed on Jun 08, 2024