Payment Holiday........Should I?

skemp1

Hello,

Some guidance would be greatly appreciated:

I have just took out a 2 year fixed rate mortgage with the Halifax after being on a higher fixed rate with them for the last 2 years.

We moved into this brand new home 2 years ago and we took out a loan of 10k @ 7.5% which is now down to 5.5k to help with costs etc..... We are getting a bit sick of this loan hanging over our head and our financial landscape has changed as my wifes work with a charity has completely dried up due to government cuts.

Our mortgage has an option of a 6 month payment holiday and I am thinking of taking them up on this offer and clearing the 5.5k over that 6 month period?

Are there any downsides to this? At first glance it looks like a good idea but am I missing something?

jamscone_2

I guess it depends if you have enough control to actually use the money for something useful.
I took a three month mortgage break, but somehow the money seemed to go nowhere and I don't know what I did with it.

Also, although I'm sure they told me, it didn't sink in that interest is still added to the total owed on the mortgage during that period. So by the end of the 'holiday' my monthly payments went up.

So... for me I wouldn't do it again unless I had to.

opinions4u

You are moving a short term unsecured loan to a longer term secured agreement.

If you then get in to difficulties in future it could cost you your house.

Is it worth it?

Mishomeister

Don't forget that you will be paying an extra 6 months of interest on your mortgage o you need to calculate how much extra will that cost. The difference will sit in your outstanding mortgage amount. If it is large it is not worth doing it, if not it might be. I would contract bank and ask how much extra interest will u end up paying should take repayment holiday

Thrugelmir

skemp1 wrote: »

Are there any downsides to this? At first glance it looks like a good idea but am I missing something?

Potentially your credit record will be marked as "authorised arrears". If so it will show for 6 years. May impact your ability to obtain credit at a later date.

rothchick

Just thought I'd let you know that the payment holiday procedure for Halifax has changed.

You can only have 2 payment holiday months every 3 years now and you have to have at least 75% LTV

Here is some more info - under payment holidays

http://www.halifax.co.uk/mortgages/Existingmortenquiries.asp


As far as I'm aware having a pre arranged payment holiday will not affect your credit rating. I can't see why anyone (who is not in financial difficulties) would apply if this was the case.

HTH