If you're taking a break from your mortgage payments, you might be wondering what happens when your payment holiday ends.
While you're on your payment holiday, you don't need to do anything. We'll write to you before it ends to let you know:
- Your new monthly payment amount. This will be higher than before your payment holiday, to cover the interest charges and payments you missed while you took a break. If any element of your mortgage is on a repayment basis your new monthly payment won't initially include any interest which was built up during your payment holiday. This interest will be added after your payment holiday ends and will be included in your monthly payment when it is re-calculated in the future.
- All the options and support available to you after your payment holiday. This will include some useful tips and advice on how to get your mortgage back on track.
- How we can help if your income is still affected by coronavirus. We'll tell you how we can help if you'd like some more support.
In the meantime, please don't call us. Rest assured we'll be in touch before your current payment holiday ends.
What are my options when my payment holiday ends?
Spread the cost across the rest of your term
When your payment holiday ends, you can simply choose to continue to pay your new monthly amount.
If you pay by Direct Debit – you don’t need to do anything. We’ll change the amount you pay each month and collect it as usual when it’s due.
If you cancelled your Direct Debit – you’ll need to call us to set up another Direct Debit on 0345 845 8555, to cover your new monthly amount. You need to do this at least five days before your next payment is due. If your Direct Debit will not be set up in time for your next monthly payment we can tell you how else to pay.
If you have an interest-only mortgage – you should make sure that you have enough money put aside to repay the higher balance when your term ends.
Make a lump-sum overpayment to catch up
When your payment holiday ends, you might want to overpay your mortgage to cover the payments and interest charges you missed.
You can make a one off, lump-sum overpayment. Please check your mortgage offer to see if any early repayment charges might apply. Here are some examples of how this could affect your mortgage, based on a three month payment holiday followed by a lump-sum overpayment:
|Repayment Mortgage||Interest-Only Mortgage|
|Outstanding mortgage balance before payment holiday||£100,000||£100,000|
|Term remaining||20 years||20 years|
|Monthly payment before payment holiday||£542||£229|
|New monthly payment after payment holiday||£551||£231|
|New monthly payment after overpayment||£545||£228|
|Reduction in monthly payment resulting from overpayment||£6||£3|
|Total amount to repay before payment holiday||£130,120||£155,000|
|Total amount to repay after three month payment holiday||£130,605||£155,375|
|Total amount to repay after overpayment||£130,315||£154,835|
|Reduction in total amount to repay due to overpayment||£290||£540|
Please note that these examples do not apply to offset mortgages. Find out more about how offset works.
If you have an arrears balance on your mortgage from before you took a payment holiday, any lump-sum overpayment you make will be allocated against the arrears balance first. If you overpay more than the arrears balance, the surplus will be allocated against the payments and interest charges you missed.
How do I make a lump-sum overpayment?
You can make an overpayment in the following ways:
- Online using Internet Banking from an existing Scottish Widows Bank savings account or your nominated external account.
- Using Telephone Banking from an existing Scottish Widows Bank savings account or your nominated external account.
- Send a cheque (personal/building society account) payable to ‘Scottish Widows Bank <mortgage account holder’s name>’ to: Scottish Widows Bank, PO Box 883, Leeds LS1 9TY. Please write your account number on the back of your cheque.
- By bank transfer from your nominated account using the following details:
Sort code: 30-18-05
Account number: 00030372
Reference: your mortgage account number. Your account number can be found on your Annual Statement, on Internet Banking or by calling us.
If you have a fixed interest rate – once you’ve made your overpayment we’ll write to you to let you know your new monthly amount and automatically adjust your Direct Debit.
If you have a variable interest rate – once you’ve made your overpayment you’ll need to call us to recalculate your monthly amount and change your Direct Debit. If you don’t contact us your monthly payments will be the same amount as before you overpaid, and your monthly mortgage payment will only be recalculated the next time we need to do it, for example following a Bank of England Base Rate change.
Offset the mortgage interest
If you have an Offset Saver Account you might want to pay money into this account to offset the interest you would be charged for the payments you missed.
You can make a one off lump-sum payment into your Offset Saver Account, or set up a regular payment, whatever works best for you.
Find out more about how offset works.
How do I pay money into my Offset Saver Account?
You can make a one off lump-sum payment or set up a regular payment into your Offset Saver Account using Internet Banking.
If you’re not registered for Internet Banking call us on 0345 845 8555 to use our Telephone Banking service.
Extending the term of your mortgage
If your payment holiday is coming to an end, you'll be aware that your monthly mortgage payment will go up to cover the payments and interest charges you missed while you took a break. However, if you're on a repayment mortgage you could reduce your monthly payments by extending the term of your mortgage.
Our mortgages are serviced by independent mortgage advisers. If you already have a mortgage adviser you should contact them if you want to discuss extending your term.
Some mortgage advisers charge a fee for their service.
If you have a query or just need some information about your mortgage you can call our customer service team on 0345 845 0829.
Still worried about making your mortgage payments?
If you're in a position to resume your payments after your break, we strongly recommend that you do so to keep your monthly payments and interest charges as low as possible. However if you find that you need further support when your payment holiday ends, but you think you'll be able to resume your monthly payments in three months' time, you may be able to take another payment holiday for an extra three months. If you think this is the best option for you, you can apply online.
If you think your income will be affected longer term, we have a number of ways to help. If you think you’re in danger of falling behind with your mortgage payments, the key thing is to remember to let us know as soon as possible. We’ll do everything we can to help ease your situation and get you back on track.
If you’re worried about your situation, please call us on 0800 001 5145. We’ll discuss your options with you and explain how we can help. Lines are open 9am to 5pm Monday to Friday. We’re closed on Bank Holidays.
If coronavirus has affected your income, you can find out more about the support available to you on the UK Government website.
Will a Payment Holiday affect my Credit Score?
Payment holidays will not have a negative impact on your credit file. However, you should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.