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Cost of taking a mortgage holiday revealed

Written by: Emma Lunn
The average cost of a three-month mortgage holiday is £665.08, and a six-month break £1,331.95.

One in six mortgage borrowers is currently taking a mortgage payment holiday, according to UK Finance.

But it’s not free money and many people may not realise the true cost of taking a break from their monthly payments.

How much extra it will cost will depend on the size of your mortgage, the interest rate, and how long you have left until your mortgage is paid off completely. found that, on average, homeowners looking for help with their mortgage payments have an outstanding loan of £136,000.

Figures from and its mortgage technology partner Koodoo found that while a three-month mortgage holiday only adds an average of £11.21 per month to a mortgage, the debt builds up over time and could add £665.08 to the amount repaid in total.

It calculated the effect of various scenarios assuming the interest and principal payments during the payment holiday are recapitalised into the loan, and that the interest rate on the mortgage is 2.72% for the entire mortgage term.

It found that someone with a £136,000 mortgage taking a three-month mortgage holiday would see their regular monthly payment jump by £11.21 to £720.22. Based on an average 21-year term, this would cost an additional £665.08 overall.

The Financial Conduct Authority announced last week that mortgage lenders would soon be obliged to offer six-month mortgage payment holidays.

According to, 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, says: “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.”

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