Mortgage payment holidays...

xbarnes

Hi there,

I wonder if anyone can help me... I heard from a friend that you can take mortgage payment holidays on some of your mortgages and use the extra money to over pay off the more expensive mortgages that you may have, is this true, and could you pay off your mortgage quicker and save money?

We are with the nationwide, and have 4x mortgages. 3 are at 2.5% and the fourth (the large one) is a fixed rate at 4.x%. I read that that you can take a mortgage payment break for 3 to 12 months... I was thinking about taking a break on the 2.5% ones and using the saved money to pay off the 4.x% one.

My question is, would this actually save us money in the long term?

Also, is a mortgage payment holiday some sort of bank scam whereby they claim even more on the interest that you pay subsequently over the extended term... Surely it's extended rather than payment increases!? How do payment holidays work?

Looking forward to a response,

Kind regards,


Barney

poppy10_2

xbarnes wrote: »

Also, is a mortgage payment holiday some sort of bank scam whereby they claim even more on the interest that you pay subsequently over the extended term... Surely it's extended rather than payment increases!? How do payment holidays work?

http://www.lovemoney.com/news/property-and-mortgages/mortgages/3172/the-true-cost-of-a-months-mortgage-payment-holiday

A mortgage payment holiday is essentially authorized arrears. The term of the mortgage doesn't increase. The monthly payments will increase to cover the arrears

Thrugelmir

xbarnes wrote: »

Also, is a mortgage payment holiday some sort of bank scam whereby they claim even more on the interest that you pay subsequently over the extended term...

No scam. The quicker you repay any debt the less interest you'll pay. That's the way borrowing money of any kind has always worked.

xbarnes

Is this a viable idea here?

Thrugelmir

xbarnes wrote: »

Is this a viable idea here?

In reality no. A payment holiday may cause more harm than good.

A more constructive approach would be to review your expenditure. Cut out waste and overpay the most expensive sub account you have.