Good idea??

Jesscat

Can someone tell me whether this is a good idea, I always seem to think something will help and then people point out the bad things about it and it really helps!

I have three credit cards all with high APRs, I was considering applying for a payment holiday from my mortgage for 6 months so I can use this money to throw at them and get them cleared, I know this will increase the interest I pay in the long term on my mortgage but I think i'll feel much happier if I can get some of this credit card debt down

After the six months is up it would more or less leave me with my mortgage, my two loans and my Marks credit card which has a life of balance APR.

So what do we think??

Thanks in advance

rog2

Why not try to re-negociate the APR with the CC companies? I got my Barclaycard down from 24.9% to 12.9% just by telling them I was thinking of transferring the balance. In my case this was an empty threat as I had just been refused two cc applications.

*zippy*

Hi Jesscat

I have no experience of this, but from reading on here one thing to think about is check with your motgage company if they allow you to add the missed payments on the end or do they put up your future payments until you catch up. If they upped your payments could you afford it and pay off remaining debt?

zippy x

Snaggles

Hello! I'm not criticising your idea at all, just trying to see if I can think of any bad points that you haven't already though of yourself .

If you take a payment break now, will that be the only one you can take? What if you needed to take a payment break for another reason (ie lost your job, illness, etc).

Because the mortgage is over a much longer term, would you actually pay more in the long run by taking a payment break rather than just continuing as you are now? Because although the APR on the mortgage is much lower, you are paying it for a much longer period.

Some mortgage companies will allow you to pay just the interest on the mortgage - would this be an alternative? Because with a complete payment holiday they will still charge the interest but add it to the total amount of your mortgage, meaning you are then paying interest on a larger amount. If you pay just the interest though, you are just 'treading water' for a few months - the actual amount of your mortgage wont increase. Oh, I'm not sure if I explained that clearly - let me know if you want me to have another go!!

Hope this helps!

*zippy*

http://new.egg.com/visitor/0,2388,3_54988--View_1028,00.html

Use this calculator to work out how much a payment break will cost you in interest.

Snaggles idea is a good one, going interest only will give you a bit of breathing space.

Snaggles

Great link, thanks Zippy! Glad you managed to understand what I was babbling about lol!

Jesscat

Thanks a lot will see if I can do it and continue paying the interest

CLAPTON

to my mind the most important consideration is whether you have your spending under control..i.e. are you now spending less than your income...if yes then the mortgage holiday seems a good idea as long as all the money then goes on the other debts. although the interest only idea may be worth pursuing you may find it doesn't provide suffient money to really reduce the CC debts.

Jesscat

No worries on that score my spending days are well and truly over, essentials only for the forseeable future!!!