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Payment Holiday Term Extension

Extend your mortgage term after a payment holiday

If your payment holiday is coming to an end, you’ll be aware that the amount you pay each month will go up to cover the payments and interest you missed while you took a break. The good news is that if you’re on a repayment mortgage, you could extend the term to keep the amount you pay each month closer to what it was before your payment holiday.

If you took a payment holiday for one to three months, we'll extend your term by six months. If you took a payment holiday for four to six months, we'll extend your term by 12 months.

What is a term extension?

A term extension is where you pay your mortgage for a longer period, to reduce your monthly payment.

If you’ve missed payments and were in arrears before you took a payment holiday, extending the term of your mortgage won’t cover any of those missed payments. It’s important you contact us to talk about your options for paying the arrears.

How long can I extend my term for?

If you want to keep your monthly payment amount closer to what it was before your payment holiday, we can extend the term of your mortgage. Depending on how long you took a payment holiday for, we can extend the term of your mortgage by six or 12 months:

  • If you took a payment holiday for one to three months, we'll extend your term by six months
  • If you took a payment holiday for four to six months, we'll extend your term by 12 months.

The term end date must not take you beyond your retirement age.

If your term extension takes the term of your mortgage beyond your retirement age, or if you’d like to extend your term by a different length, you’ll need to contact an independent mortgage adviser.

Please note that we cannot guarantee to reduce your monthly payment to exactly what it was before the payment holiday.

How will a term extension affect my mortgage?

When you extend your mortgage term, the amount you pay each month will go down. However, it’s important to remember that you will pay more in interest charges as it will take you longer to repay the mortgage.

If you are looking to reduce the total amount of interest payable and the overall cost of borrowing over the term of your mortgage, you should consider the option to make an overpayment rather than a term extension.

The tables below show how a term extension could help to reduce your monthly payment closer to what it was before a payment holiday. It also shows the impact a term extension has on the total amount you’ll repay on your mortgage.

These examples are based on a repayment mortgage with a loan of £250,000, at an interest rate of 2.75% They do not take account of any offset savings balance that may be linked to the mortgage.

Example 1 – a six month term extension after a three month payment holiday

Before a term extension

Remaining mortgage term 20 years
Monthly payment before a three month payment holiday £1,333.65
Monthly payment after a three month payment holiday £1,355.42
Total amount you would have paid £325,300.80

After a six month term extension

New remaining mortgage term 20 years 6 months
New monthly payment £1,330.63
New total amount to repay £327,334.98

Example 2 – a 12 month term extension after a six month payment holiday

Before a term extension

Remaining mortgage term 20 years
Monthly payment before a six month payment holiday £1,312.33
Monthly payment after a six month payment holiday £1,355.42
Total amount you would have paid £325,300.80

After a twelve month term extension

New remaining mortgage term 21 years
New monthly payment £1,307.05
New total amount to repay £329,376.60

How do I apply for a term extension?

If you’re happy to apply for a term extension without receiving advice, you can apply below.

You can’t apply if:

  • The term extension you need will take you beyond your retirement age
  • Any part of your mortgage is interest only
  • Your total mortgage term could exceed 40 years after the term extension has been applied
  • The lease on your property could have less than 30 years remaining after the term extension has been applied.

If you’d like to apply for a term extension of a different length, or would prefer to receive advice, our mortgages are serviced by independent mortgage advisers. If you already have a mortgage adviser you should contact them.

Some mortgage advisers charge a fee for their service.

Ready to apply?

Apply for a term extension online