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 charges 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 close to what it was before your payment holiday. 

What is a term extension?

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

How long can I extend my term for?

If you want to keep your monthly payment amount close to what it was before your payment holiday, we can work out the term extension you need. The most we can offer online is an extension of 18 months and the term end date must not take you into retirement.  

If you’d like to extend your term by more than 18 months, you should speak to a mortgage adviser before you apply.

Please note that we cannot guarantee to reduce your monthly payment to exactly what it was before the payment holiday, but we’ll get it as close as we can.

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

Example 1

Before a term extension

Outstanding mortgage balance

£100,000

Remaining mortgage term

20 years

Monthly payment before a payment holiday

£524.93

Monthly payment after a payment holiday

£542.17

Total amount you would have paid after a payment holiday

£130,120.80

After a term extension

Outstanding mortgage balance

£100,000

New remaining mortgage term

20 years 11 months

New monthly payment

£533.87

New total amount to repay

£131,614.36

Example 2

Before a term extension

Outstanding mortgage balance

£250,000

Remaining mortgage term

20 years

Monthly payment before a payment holiday

£1,312.33

Monthly payment after a payment holiday

£1,355.42

Total amount you would have paid  after a payment holiday

£325,300.80

After a term extension

Outstanding mortgage balance

£250,000

New remaining mortgage term

20 years 11 months

New monthly payment

£1,310.90

New total amount to repay

£329,035.90

The examples above are based on a mortgage interest rate of 2.75%. Please be aware that interest rates could change over the remaining mortgage term and may result in the total amount to repay increasing or decreasing.

How do I apply for a term extension?

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

We’ll work out the term extension you need to keep your monthly payments as close as possible to the amount you were paying before you took a payment holiday. 

In some cases it may not be possible to ask for a term extension online.

You must speak to us if:

  • You’d like some help from a mortgage adviser.
  • The term extension you need will take you into retirement.
  • 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.

Ready to apply?

We’re currently dealing with a much higher volume of phone calls than usual, so you may find it quickest to ask for a term extension by using our online form. It should only take a couple of minutes.

If you need some help, you can ask to speak to a mortgage adviser here. 

Apply for a term extension

You could lose your home if you don’t keep up your mortgage repayments