A family facing redundancy and a £2,981-a-month mortgage could cut their payments temporarily by switching to interest-only or extending the length of their loan, mortgage broker David Hollingworth has said.
The homeowner, who has two young children, said he had been paid three months’ salary after losing his job but feared it would take longer to find another senior role. His wife works part-time, while most of the household’s mortgage payments had previously been covered by his income.
The couple’s mortgage is fixed at 4.78 per cent, with just over a year gone on a five-year deal and 20 years remaining on the term. They have savings, but are concerned about using them too quickly while much of their wealth remains tied up in pensions.
Hollingworth said the first step should be to contact the lender before any payments are missed, rather than waiting until the household is already in arrears.
Mortgage payments could fall by more than £1,000
Under the Mortgage Charter, borrowers who are up to date with their payments can ask to switch to interest-only repayments for up to six months. This means the monthly instalment covers the interest but does not reduce the amount originally borrowed.
Based on the figures provided, Hollingworth estimated that the family’s payment could fall by more than £1,100 a month, to around £1,900, if the lender agreed to the temporary change.
Another option would be to extend the mortgage term. By spreading the outstanding debt over a longer period, the monthly cost could fall to roughly £2,100, representing a reduction of about £800 a month.
The Mortgage Charter allows eligible borrowers to request either option without a fresh affordability assessment. It also allows those who extend their term to ask to return to the original arrangement within six months.
The charter was reaffirmed by the Government and major lenders on 26 March 2026 amid concerns about mortgage rates and household finances. The signatories represent about 90 per cent of the UK mortgage market, although the commitments do not apply to buy-to-let loans.
Support agreed under the charter should not affect a borrower’s credit file, provided they remain up to date with payments and use the eligible temporary measures. However, the precise help available will depend on the lender and the borrower’s circumstances.
Redundancy mortgage help may come at a higher long-term cost
Interest-only payments would provide immediate breathing space, but the mortgage balance would not fall during the six-month period. Once repayments resumed, the outstanding capital would have to be cleared over the remaining term, potentially increasing the monthly payment and total interest bill.
Extending the term would also reduce the monthly burden but could leave the family paying interest for longer. If the longer term became permanent, the additional cost could run into tens of thousands of pounds, or more depending on the size of the loan and the length of the extension.
Leaving the fixed-rate deal early to search for a cheaper mortgage is unlikely to be attractive. The borrower could face a substantial early repayment charge, particularly as the family is only around a year into a five-year fix.
MoneyHelper advises borrowers to check whether they have mortgage payment protection or accident, sickness and unemployment cover, as some policies may provide support following redundancy. A lender may also consider a temporary payment arrangement, although a payment holiday is not automatic and can increase both the balance owed and the eventual cost of the mortgage.
Some households receiving qualifying benefits may also be able to apply for Support for Mortgage Interest. This is a repayable loan and generally covers only part of the interest, so it should be considered alongside other support rather than as a replacement for income.
Hollingworth said borrowers should approach their lender as soon as they begin to worry. A bank or building society may be able to offer a tailored arrangement, but delaying contact until a payment is missed can reduce the options available and risk damage to the borrower’s credit record.
