Deferring mortgage payments if your circumstances have changed due to Coronavirus (COVID-19)

If your circumstances have changed due to COVID-19 and you’re struggling to make your mortgage payments please contact us as soon as possible by emailing [email protected] or give us a call on 0141 274 5409.

If you’ve already deferred your mortgage payments

If you’ve already taken a payment holiday due to COVID-19, we will contact you in writing and by telephone to discuss your options. There may be several options available to you, including a further payment holiday if this is needed. If you can afford to restart your mortgage payments, you should do so as soon as possible.

If you’re concerned that you can’t afford your monthly payments

If you were not in arrears when you asked for a payment holiday but your financial circumstances have changed and you’re now worried that you can’t afford your monthly payment, get in touch by emailing [email protected] or call us on 0141 274 5409 .  We’ll look at your circumstances, assess the affordability and discuss suitable options with you. This could mean extending the payment holiday for a longer period, or it may be something different. The Building Societies Association (BSA) and the Money Advice Trust have also released a booklet with guidance on what to do if you can’t pay your mortgage, or think you might struggle to make your payments in the coming months. You can access the guide here.

What an extended payment holiday means to you

If, after our review, we extend your mortgage payment holiday, it’s important to remember that this is a deferred payment. This means you still owe these payments, and interest will continue to be charged throughout this time which will still need to be paid at a later date.  The overall cost of your mortgage will be higher as more interest overall will be payable.

Worked example of what a payment deferral may mean to you

Please note that the figures included in the two examples below are for illustrative purposes only and are designed to give a general indication of additional costs that could occur if a payment deferral is taken and either:

  • The remaining balance is repaid over the remaining term – capitalisation of payment deferral (illustrated in example 1), or
  • The payment deferral is taken and the balance is repaid over remaining term plus 3 months – extension to term (illustrated in example 2)

Example 1. Capitalisation 3 month deferral

Mortgage type: Repayment mortgage. Current outstanding mortgage balance: £100,000. Interest rate: 4.99%. Term remaining: 20 years.

Current monthly payment:£659.41
New monthly payment after payment deferral (no extension to term):£672.46
Monthly increase:£13.05
Total amount to repay without payment deferral:£158,258.40
Total amount to repay with 3 month deferral and no extension to term:£159,373.02
Total increase in amount repaid over the mortgage term:£1,114.62

Example 2. Term extension 3 month deferral

Mortgage type: Repayment mortgage. Current outstanding mortgage balance: £100,000. Interest rate: 4.99%. Term remaining: 20 years.

Current monthly payment:£659.41
New monthly payment after payment deferral (term extension):£667.52
Monthly increase:£8.11 (term extension)
Total amount to repay with 3 month deferral and 3 month extension to term:£160,204.80
Total increase in amount repaid over the mortgage term + 3months:£1,946.40

Ways to reduce your monthly payment at the end of your payment holiday

There are options available to help keep your payments as close to your old payment amount as possible. These include making a lump sum reduction or extending the period of your loan, and we’re happy to discuss these options with you:

Lump sum payment

You can make a one-off lump sum payment to cover the missed payments and interest added during your deferral period. This option means your mortgage would be in a similar position as it would have been if the payment holiday had not happened, and your monthly payment would be similar to what it had been before. If you want to do this, you can email [email protected] or call us on 0141 274 5409.

Extending the period of the loan

Please note this is not an extension to the payment holiday/deferral. If you need a further extension, please see the ‘If you’re concerned that you can’t afford your monthly payments’ section, above.

In most circumstances we can agree to extend your mortgage by the same number of months as your payment holiday. This means that your mortgage will continue for longer than originally planned. Your monthly payment will return to a similar amount to what it was before the payment holiday.  If you want to do this, you can email [email protected] or call us on 0141 274 5409.

Mortgage payment holiday calculator

You may find it useful to check how a mortgage payment holiday may impact your monthly payment.  Please note this won’t be exact but will give a good indication of the impact the payment holiday can have on your payments. Please note this link will take you to a third party site: Mortgage payment holiday impact calculator.

If you need further debt advice you can contact  The Money Advice Service or Stepchange Debt Charity.

What to do if you need further support

  1. Contact us initially by emailing [email protected] or call us on 0141 274 5409
  2. We may ask you to complete and income and expenditure form
  3. We’ll assess affordability and discuss your options
  4. All agreements will be explained clearly, and we’ll send you a letter confirming the support provided

WHILST PAYMENT DEFERMENTS DO NOT HAVE AN IMPACT ON YOUR CREDIT SCORE, SOME LENDERS LOOK AT OTHER INFORMATION SUCH AS BANK ACCOUNT INFORMATION WHEN ASSESSING LOAN DECISONS

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