Mortgage Holidays?

sockdogg

I am very tempted to take a mortgage holiday for 6 months and I was wondering if this was a good move. We have about £67k on our mortgage and pay £476 p/m.

If we take a break we then only have to pay an extra £18 per month on top. We've been saving (forever!!) for a Florida holiday- I am in the process of applying to live in Canada (fees of about £2500)- My partner and I also have a wedding to pay for.

Any feedback as to whether this is a wise move would be really helpful as we have saved long and hard for the little money that we have and do not want ruin all our good work!

silvercar

The downside of a mortgage holiday is that all the unpaid interest is added to the loan so those 6 missed payments of £476 become almost £3,000 on your mortgage. That £18 per month doesn't sound much but it is for every month until your mortgage is finished. Your £67k mortgage will morph into a £70k one.

Generally, payment holidays for one offs are OKish but payment holidays for annual holidays could become a real burden if you do it too often.

emmaHarris_2

If you take a payment holiday agreed with the lender do they update your credit records as either late or missed payments?

AndrewSmith

emmaHarris wrote:

If you take a payment holiday agreed with the lender do they update your credit records as either late or missed payments?

Good question Emma

If it's previously agreed with your lender then no, as long as it is an allowable condition of the mortgage offer.

If, however you miss a couple of payments then ask to go onto a payment holiday, you may not be allowed to include the missed payments prior to the official payment holiday. Some lenders will, others wont.

Andy

Wickedkitten

emmaHarris wrote:

If you take a payment holiday agreed with the lender do they update your credit records as either late or missed payments?

Just make sure you write them beforehand to tell them you are taking it and you should be fine.

emmaHarris_2

Through discussions with one borrower (sub prime again I know) it is in the contract to be able to take payment holiday. Unknown to the borrower for some many months they placed adverse updates to thier records, showing 'missed payments and accumulating. When they were asked about this their response was to effect you cant have it all ways. The borrower had since moved on from this 'lender' and is still struggling to get it corrected. When they moved on it was very difficult as this record hampered the mortgage transfer to a new lender. I was curious as we didnt know how the rules applied so thank you all for your feedback.