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What Happens When Your Payment Holiday Ends?

Your payment holiday is due to end soon. What will happen when it does? To find out - and your options - continue reading.

The UK finds itself in a precarious financial position – and this has affected just about every household across the country. As a result, millions of people have taken out payment holidays to avoid running into arrears.

Under this scheme, you can request a freeze on payments for many products such as mortgages, credit cards, and personal loans – although interest rates should continue as normal. For those in financial difficulty, payment holidays have been a huge help.

Yet, for many lenders, this payment break is scheduled to end in October. As it won’t be long until the payment holiday comes to an end, what can you expect?

The payment holiday ends, what now?

Once the payment holiday ends, your lender should be in contact asking how you’re planning to repay the shortfall. If you cannot afford to make repayments, you may be able to extend the payment holiday further. However, this is entirely at the creditor’s discretion.

If you can afford repayments, the lender should come up with a new payment schedule based on your circumstances. This may involve:

Increasing the length of your policy

Although the amount you’d regularly pay might decline, the length of your policy could increase to recover the shortfall as well as ensure you can repay what you owe. This means, due to interest, you may be paying back more in the long run.

Increasing what you owe

To recover the deficit from the holiday, your lender may increase your monthly payments. If you didn’t have long left on the policy, you may be asked to pay substantially more than you otherwise would have done.

What will happen to my credit rating?

Providing you start making payments again at the end of the holiday, the break shouldn’t negatively impact your credit rating. However, the fact you’ve taken a payment holiday – or received an extension – should still appear on the report. This means lenders will be able to see it.

Your credit rating will probably be harmed if you continue to miss payments once the holiday is over.

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What should I do if I can’t make my payments?

If your payment holiday is coming to an end, and you’re worried about making payments, then it’s time to get debt help. The consequences, otherwise, could be extreme. Not making payments on your mortgage – for instance – could result in your home being repossessed.

To find out how we might be able to help, click the button below. We may be able to make life much easier by resolving your unsecured debts through a consolidation loan.

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Unsecured Loan Representative 69.9% APR

Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.

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If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.

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