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Buy-to-let mortgage payment holiday

What is a mortgage payment holiday?

A mortgage payment holiday entitles you to not make any repayment on your Paragon mortgage for a period of up to three months. The amount deferred under a mortgage payment holiday remains repayable and will continue to accrue interest, which will lead to increased payments over the term of the mortgage.

Does this impact my credit rating?

Whilst taking advantage of a payment holiday, we do not report your deferred payments to credit reference agencies. This means it does not have an adverse effect on your credit file and any arrears status from before your payment holiday won’t increase.

However, we are required to report your account balance and any interest we charge to the credit reference agencies. Please also remember that whilst your payment holiday will not be registered as arrears with the credit reference agencies, it may be taken into consideration by lenders, along with other information provided by you or your bank, when making lending decisions. It is important to note that once your payment holiday ends, if you miss any of your monthly repayments, we will report these to the relevant agencies.

Can I take out a mortgage payment holidays even if my tenant is not experiencing a loss of income?

The Government guidance is that mortgage payment holidays should be taken to support tenants experiencing financial difficulties as a result of coronavirus. Paragon has a range of options available for customers experiencing financial stress and we would urge customers to contact us to discuss their individual circumstances.

What will happen to the payments I don’t make during the course of the mortgage payment holiday?

Deferring your mortgage payment will increase the total balance due. As this balance attracts interest, it will therefore increase the total amount payable over the life of the loan and lead to increased payments over the term of the mortgage.

What if I want to take out additional borrowing?

Taking a mortgage payment holiday may be considered during applications for further lending with Paragon and other lenders.

What if I’m still experiencing financial difficulty when my payment holiday ends?

If you’re worried about paying the new monthly amount when your payment holiday ends, then please contact us as soon as possible. We can talk about other options available to you, such as:

  • Extending your current loan term
    We may be able to extend your current loan term to make your monthly payments more affordable for you. However, this will increase the total amount you repay over the remaining term of your loan

  • Paying off your deferred payments monthly
    We can also offer a monthly payment arrangement, to help you repay your deferred payments from your payment holiday. This means your normal monthly payment will remain the same, but you’ll pay an additional amount to clear the payments accrued during your payment holiday

  • Making a lump sum payment to pay off your deferred payments
    You can pay off the deferred payments from your payment holiday in full as a lump sum. This means your normal monthly payment will remain the same, but you will still have a small amount of interest to pay at the end of your loan term

We can also let you know the impact this will have on your credit file and we may ask you to complete a financial assessment. This will help us to assess your affordability and make sure we agree the right solution for you and your circumstances.

However, if you are concerned about your finances at any point, then please don’t hesitate to get in touch with us before your payment holiday ends.

Organisations that offer help and advice

We understand that these are very difficult and uncertain times. If you do have any concerns about your financial situation, we recommend you seek free independent advice.

For further guidance on the support available during the coronavirus pandemic, you can contact one of the following organisations.

Money Advice Service Coronavirus

For support, visit www.moneyadviceservice.org.uk/en/articles/mortgage-payment-holidays

Here are also the details of some of the organisations which offer free, confidential and impartial debt advice.

Money Advice Service

For free, easy-to-use money tools, information and advice, visit www.moneyadviceservice.org.uk.

You can also phone 0800 138 7777 to speak to a money expert, use typetalk at 18001 0800 915 4622, or add +44 7701 342744 to your WhatsApp to send a message.

Citizens Advice

For advice and information on debt and other topics, contact your local Citizens Advice or go to www.citizensadvice.org.uk

PayPlan

For free debt advice and management plans, call 0800 280 2816 or visit www.payplan.com.

Mental Health and Money Advice

For clear, practical advice and support for issues with mental health and money, visit www.mentalhealthandmoneyadvice.org.​

AdviceUK

Member centres offer debt advice including specialist advice for minority communities and people with disabilities. Visit www.adviceuk.org.uk

Christians Against Poverty (CAP)

For free debt advice. Check postcode coverage at www.capuk.org then call 0800 328 0006.

National Debtline

If you live in England, Wales or Scotland phone 0808 808 4000 or visit www.nationaldebtline.org for debt advice and information.

StepChange Debt Charity

For free debt advice throughout the UK phone 0800 138 1111 or visit www.stepchange.org

Money Advice Scotland

If you live in Scotland, visit www.moneyadvicescotland.org.uk where you can use webchat to speak to an adviser.

Advice NI

If you live in Northern Ireland, phone 0800 028 1881 or visit www.adviceni.net

Business Debtline

If you are self-employed or a small business owner, phone 0800 197 6026 or visit www.businessdebtline.org for debt advice and information.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551