What Happens When Your Payment Holiday Ends?

In a time of great uncertainty, the payment holiday scheme has provided much needed financial relief to people across the UK. Many have benefited from requesting to freeze payments on expensive debts including mortgages, overdrafts, credit cards, and store cards.

Initially, the scheme was rolled out in April for three months but has now been extended until the 31st of October. For those who have found themselves struggling recently, you can still request a payment holiday. However, you should remember that interest rates do continue as normal during this period and you could be expected to pay when we reach the new deadline.

If you have already been on a payment holiday, the reality of it ending may be dawning as we head into August. It is important to equip yourself with the right information so you can be prepared for what happens next.

Creditors will be in contact

After the extended end date, your lenders will be in contact to discuss a plan for repayments. If you are still not able to make repayments, then you should be able to extend the payment holiday further. However, the final decision will be down to the creditors and done on a case-by-case basis.

If you’re in a better financial position now, and can afford repayments, the lender should create a repayment plan suited to your circumstances. This may include:

Increasing the length of your policy

Over your payment holiday, you will have incurred the ‘missed’ interest and payments on your plan. If you want to keep repayments the same, then this may need to be covered by adding extra months onto your agreement. However, if you can now afford to make higher monthly payments this could be the better option. Extending the plan will mean added monthly interest charges which could cost you more in the long run.

Monthly payments increase

Alternatively, you could increase the amount you pay at the end of every month, so you don’t have to extend the plan. If you didn’t have long left on the policy, this may be a drastic increase to ensure the debts are covered in full. Again, this will need to be negotiated with creditors.

Will my credit rating be affected?

Your credit score will not be directly impacted by taking a payment holiday and it may not even show up on your credit report. However, lenders may be able to see you have taken a payment holiday as your record will continue to be updated during the agreed payment holiday and will show the balance every month.

If you start missing payments and have not arranged an extended payment holiday with your lender then your credit score will be negatively impacted.

What should I do if I’m unable to make repayments?

If your payment holiday is coming to an end and you’re worried you will start to miss repayments, you may need to get debt support. Leaving debts to pile up without professional help could have very negative consequences on your lifestyle. Especially if you have taken payment holidays on important debts such as mortgages as failing to meet payments could eventually result in repossession.

If you were already in arrears before you took the holiday, and the break is coming to an end, then you should act quickly to obtain professional debt advice. Your credit score will only get worse once the holiday is over. Get in contact today as we may be able to make your life much easier through our trusted debt solutions.

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