Does taking a Mortgage Holiday extend the term of your mortgage?

Rennie1971

Hi My Mortgage is with LTSB, I fixed it two a bit years ago at 5.79% and the deal expires in Feb 2010.After calling LTSB they confirmed that if I paid the penalty to "ditch my fix" LTSB wont offer me the SVR, instead they offer 4.7% or something basically another fixd deal. Therefore to get the SVR I have to wait until my fixed rate expires.:mad:

Ive been thinking, if thats the way LTSB are playing it, could take a 6 mths mortgage holiday, bank the saving and still poick up a low SVR at the end of my fixed rate? Or dues taking a mortgage holiday extend the term of your mortgage deal?

Any body have a vew on this?

beecher

You'd be building up arrears over those 6 months, so it wouldn't be a wise thing to do. You'd end up paying interest on the interest. Just keep on paying your fixed rate - 5.79% isn't that bad a rate. Overpay what you can until Feb 2010.

opinions4u

Rennie1971 wrote: »

Hi My Mortgage is with LTSB, I fixed it two a bit years ago at 5.79% and the deal expires in Feb 2010.After calling LTSB they confirmed that if I paid the penalty to "ditch my fix" LTSB wont offer me the SVR, instead they offer 4.7% or something basically another fixd deal. Therefore to get the SVR I have to wait until my fixed rate expires.:mad:

Which was exactly what you signed up for in the first place.

Ive been thinking, if thats the way LTSB are playing it, could take a 6 mths mortgage holiday

Only with the agreement of your lender.

bank the saving

And earn significantly less interest on it while your mortgage debt increases

and still poick up a low SVR at the end of my fixed rate?

Assuming it is still low at the end of your current deal.

Or dues taking a mortgage holiday extend the term of your mortgage deal?

As I understand, most 'payment holidays' are exactly that. A holiday from making payments. They aren't a holiday from paying interest. That is still being added to your mortgage account.

At the end of any 'holiday' your debt is higher, your monthly payment is increased to ensure you repay within the term originally agreed and you are slightly worse off overall.

A payment holiday is a short term loan on which you pay interest. It may help with your cash flow, but it is usually a false economy.

dunstonh

So, you want to build up arrears (albeit authorised) which will increase the amount of interest you will pay to save on the amount of interest you will pay?

if thats the way LTSB are playing it

You mean honouring your agreement. Something you dont want to do.