Forbearance UK Guide (Mortgage Payment Holiday, Lender Agreement)

Types of Mortgage Forbearance

UK lenders offer several types of forbearance depending on your circumstances and the lender's policies. Payment holiday (deferred payment) — you stop making payments for an agreed period (typically 1–6 months). The missed payments are added to your loan balance, so you pay more overall. Interest continues to accrue during the holiday. Interest-only period — you temporarily switch from repayment to interest-only payments, reducing your monthly payment significantly. For example, a £200,000 mortgage at 4% would drop from roughly £1,055 per month (repayment over 25 years) to £667 per month (interest-only). Term extension — the lender extends your mortgage term, reducing monthly payments. Extending from 20 years to 30 years lowers payments but increases total interest paid over the life of the loan. Reduced payment arrangement — you agree to pay a reduced amount for a specific period. The shortfall is either added to the balance or repaid later. Temporary rate reduction — in rare cases, lenders may offer a reduced interest rate for a limited period. The FCA requires lenders to consider forbearance options before pursuing repossession. The Mortgage Charter (introduced in 2023) also requires lenders to offer tailored support to borrowers struggling with higher interest rates. Contact your lender as soon as you anticipate difficulty — early engagement gives you more options.

How to Request Forbearance

Requesting forbearance is straightforward but requires preparation. Step 1 — contact your lender as soon as you realise you may struggle to make payments. Do not wait until you miss a payment. Step 2 — prepare a financial statement showing your income, essential outgoings, and why you are struggling (e.g., redundancy, illness, relationship breakdown). Use the Standard Financial Statement (SFS) template, which is the UK industry standard. Step 3 — tell your lender what you can afford to pay. Be realistic — proposing an amount you cannot sustain will make things worse. Step 4 — ask specifically about the types of forbearance available. Ask how each option affects your total loan cost, term, and credit file. Step 5 — get the agreement in writing. Confirm the duration, payment amount, and what happens at the end. The FCA's Mortgage Conduct of Business (MCOB) rules require lenders to treat customers in payment difficulties fairly. If your lender refuses forbearance or you are unhappy with the response, you can make a formal complaint to the Financial Ombudsman Service. Free advice is available from StepChange, Citizens Advice, and National Debtline before contacting your lender.

Impact on Credit File

The credit impact of forbearance depends on the type of arrangement. Payment holidays agreed in advance — if you agree a payment holiday before missing any payments, the lender may not report missed payments to credit reference agencies. However, they may mark the account with a forbearance indicator that other lenders can see. Missed payments before arrangement — if you miss payments before requesting forbearance, those missed payments appear on your credit file for 6 years. Partial payment arrangements — if you pay less than the contractual amount, the lender may report the shortfall as a missed payment. Interest-only or term extension — these typically have minimal credit impact if you maintain the agreed payments. The key principle: agree forbearance before missing a payment if possible. If you already missed payments, the damage is done, but forbearance can prevent further damage. Lenders report forbearance to credit reference agencies differently — some mark it as "arrangement to pay," others as "payment holiday." Check your credit report after the arrangement to ensure it is accurately recorded. Errors can be disputed with the lender and the credit reference agency. See our Credit Score guide → for monitoring advice.

Forbearance for Other Debts

Forbearance is not limited to mortgages. UK lenders across credit cards, personal loans, overdrafts, and car finance are required by the FCA to consider forbearance for customers in financial difficulty. Credit card forbearance — lenders may freeze or reduce interest, accept reduced payments, or offer a structured repayment plan through the persistent debt rules. Since 2018, FCA rules require lenders to identify customers paying more in charges than principal and offer support. Personal loan forbearance — lenders may offer payment holidays, term extensions, or reduced payment plans. Some lenders offer "payment freeze" for 1–3 months. Overdraft forbearance — lenders can reduce or waive arranged and unarranged overdraft charges for customers in difficulty. They may also convert overdrafts to a loan. Car finance forbearance — lenders may offer payment deferrals, term extensions, or voluntary termination (returning the car). The FCA's Consumer Duty rules (effective 2023) require lenders to deliver good outcomes for retail customers, including those in financial difficulty. This means lenders should proactively offer forbearance options, not wait for you to ask. If a lender is unwilling to help, escalate to their complaints team and then to the Financial Ombudsman Service.

After Forbearance — What Next

Forbearance is a temporary measure — eventually, normal payments resume or the arrangement ends. Before it ends, plan your next steps. Resume full payments — if your financial situation has improved, simply resume the contractual payments. Confirm with your lender the exact amount and date. Arrears repayment plan — if you had a payment holiday, the missed payments are added to the balance and repaid over the remaining term. Your monthly payment may increase slightly. Permanent modification — if your circumstances have permanently changed (e.g., reduced income), ask your lender to make the forbearance permanent — for example, extending the term or switching to interest-only permanently. Voluntary sale — if you cannot afford the mortgage long-term, selling the property voluntarily is better than repossession. Lenders may agree to a sale even if the proceeds do not cover the full mortgage (short sale). Repossession — repossession is the last resort. The FCA requires lenders to exhaust all reasonable forbearance options before applying for a repossession order. If you face repossession, get urgent advice from Citizens Advice, Shelter, or a solicitor. See our Mortgage guide → for more on mortgage difficulties.

FAQs

How many months can I defer my mortgage payments?

Most lenders offer 1–6 months of mortgage payment holiday. The FCA's guidance encourages flexibility, but there is no statutory right to a specific duration. The length depends on your circumstances and the lender's policy.

Does a mortgage payment holiday affect my credit score?

If agreed in advance with your lender, a payment holiday should not appear as a missed payment. However, the lender may record a forbearance marker that other lenders can see. This may affect future applications but is less damaging than missed payments.

Can I get forbearance on a buy-to-let mortgage?

Yes. FCA rules on forbearance cover buy-to-let mortgages. Landlords facing tenant non-payment, void periods, or personal financial difficulty can request forbearance. The same types (payment holiday, interest-only, term extension) are available.

Will forbearance increase my total mortgage cost?

Yes — unless the forbearance involves a gift or write-off (very rare). Payment holidays add interest to your balance. Term extensions increase total interest paid. Interest-only periods mean you pay only interest, not capital. Always ask your lender to calculate the total cost of each option.

What if my lender refuses forbearance?

If your lender refuses forbearance and you are struggling, make a formal complaint. If unresolved within 8 weeks or you receive a final response, refer the case to the Financial Ombudsman Service free of charge. Also get advice from Shelter, Citizens Advice, or StepChange.