Egg payment breaks

LongTermLurker

Hi can anyone explain how the payment holidays work with Egg's offset mortgage? For instance, if I took a 6 month break, would they just extend the term by 6 months (meaning I'd end up paying the same, subject to changes in interest rates, but for 6 months longer) or does the fact that I haven't paid any capital or interest for 6 months mean that when I start paying again I am effectively borrowing an extra 6 months' worth of interest?

Another way of looking at it is "what are the advantages and disadvantages of payment holidays"?

LongTermLurker

Is there anybody out there?

Someone must know this, surely?

gavint_3

Never had a mortgage but used to have an Egg loan - I took a 2-month payment break when I moved to a new flat.

They gave me the option of keeping the term the same and increasing the monthly payments or extending it by the 2 months (payments still increase slightly due to the extra interest).

Hope that helps.

Gavin

LongTermLurker

Thanks gavint, do you know if the end result means you pay more than you would have done if you hadn't taken the break? What I'm trying to understand is whether not paying anything for a couple of months costs more or if you just spread the amount you've missed over subsequent months.

gavint_3

Yes, you will pay more as the interest is worked out on what you owe each day, and even if you keep the total term the same you still owe more than you would have done on average over the course of the agreement.

Gavin