Mortgage Payment Holiday?

Rugmeister68

Hi Peeps

Thought I would throw this question in:
I have a mortgage with Nationwide which includes up to 2 payment holidays during the term of the mortgage, each up to 1 year each!

I have 14 Years left on my mortgage and am currently fixed for one more year (until Jan '10) at 5.25%
Just wondering if it would now be a good idea to take a payment holiday for a year in the hope that next January I can fix again at a much lower rate?
When you take a holiday you don't add a year onto your mortgage your payments just go up to reflect the missed months.Also you dont carry the last year on a fixed rate over....
I can't get my head around whether this will save me any money or is a good idea, can anybody help please?
thanks

Gavin

dunstonh

When you take a holiday you don't add a year onto your mortgage your payments just go up to reflect the missed months.

Not only the missed months but extra interest you will have to pay over the remaining period.

Rugmeister68

However, if I am paying £1000 pm now and take a break for a year my payments are likely to go up to about £1100 pm month next year if I stayed on the same rate, but surely next Jan when my fixed rate of 5.25 is up I will be able to get a much better rate of around 3-4% which will mean my payments are around £800 pm, does that make sense?
I/e I dont pay my mortgage for a year and when I do start again I'm saving a couple of hundred pm, or am I going crazy?

beecher

Bit of a gamble to assume you'll be on 3-4% next year. Interest rates could well be on their way up by then - who knows. You'd be paying more over the long term than you would if you kept paying your mortgage, so why do it?

SmileyG_2

Rugmeister68 wrote: »

Hi Peeps

Thought I would throw this question in:
I have a mortgage with Nationwide which includes up to 2 payment holidays during the term of the mortgage, each up to 1 year each!

I have 14 Years left on my mortgage and am currently fixed for one more year (until Jan '10) at 5.25%
Just wondering if it would now be a good idea to take a payment holiday for a year in the hope that next January I can fix again at a much lower rate?
When you take a holiday you don't add a year onto your mortgage your payments just go up to reflect the missed months.Also you dont carry the last year on a fixed rate over....
I can't get my head around whether this will save me any money or is a good idea, can anybody help please?
thanks

Gavin

Don't treat your mortgage as an opportunity to make a buck. Treat it as a debt to be paid, and pay it down as quickly as you can. Keep the payment holiday option open. There may be a time when it becomes REALLY useful>

SmileyG

koexelek

SmileyG wrote: »

Don't treat your mortgage as an opportunity to make a buck. Treat it as a debt to be paid, and pay it down as quickly as you can. Keep the payment holiday option open. There may be a time when it becomes REALLY useful>

SmileyG

Very good point.

Payment breaks should really only be used if essential. Not something to take a gamble with

Jasper27_2

I wouldn't take it unless you really have to. I have the facility to take a break from payments too but I'm keeping it in reserve just in case I end up jobless or sick. I like the security of knowing I can do this but I think whilst you can keep getting your debt down you should keep on paying.