Mortgage holiday and then full redemption

Skorpion

Hi All,
I have a dilemma and wanted your advice on this.
So im currently working from home, and im considering taking a mortgage holiday for 3 months. Im in the process of selling my house and all looking good.
my dilemma is should i take the mortgage holiday and then redeem once the house sale goes through. The buyers are awaiting their searches to come back and still keen to proceed, they have their mortgage offer already. Im currently on SVR (3.59%) so thinking i can take the 3 month holiday and then redeem in the next 3 months when the sale is complete. Theres no penalties for me to pay as not in a fix. Does it make sense to do that or just continue to pay the mortgage at SVR?

Any thoughts and feedback are welcome. I know im lucky given the current circumstances and didn't fix knowing we would sell the house. Should i take advantage of the mortgage holiday and save 3 months mortgage payments in the process?

davidmcn

Only downside is that you'll pay more interest than continuing with payments as normal. Though will end up being a small amount if you redeem within a few months. I take it you don't have any actual problem in meeting the monthly payments?

Thrugelmir

There's no benefit to taking a mortgage holiday unless the released money is going to save you interest on borrowings elsewhere. 

Skorpion

Allow me to explain the detail i believe. Bear in mind im on SVR so already paying higher then normal monthly payments.
Mortgage is £800 a month on SVR. Mortgage holiday of SVR is 3 months so 3x800=2400. Within the 3 months i understand interest will accrue and i have been told by the bank a guesstimate for this will be 1.5k.
2400-1500=900. This 900 stays in my pocket currently as opposed for waiting for the house to sell. Either way i pay the balance of my mortgage off when the sale goes through.

davidmcn

If the missed mortgage payments are merely going to stay "in your pocket" then I don't see the point of taking the mortgage holiday. It's only worthwhile if you're actually going to have cashflow problems.

Skorpion

I dont have any cash flow problems now but a bird in the hand is worth 2 in the bush as they say. 

Thrugelmir

Going back to your original question. There is no saving. Just an additional interest charge that benefits your lender. If that's worth a bird in hand so be it. 

Skorpion

Thrugelmir said:

Going back to your original question. There is no saving. Just an additional interest charge that benefits your lender. If that's worth a bird in hand so be it. 

I do make a saving of around 900 over the 3 months and when mortgage is redeemed the balance is as is, less the interest payments for the missed 3 months, so im saving the capital over the 3 months once redeemed. 

davidmcn

Skorpion said:

Thrugelmir said:

Going back to your original question. There is no saving. Just an additional interest charge that benefits your lender. If that's worth a bird in hand so be it. 

I do make a saving of around 900 over the 3 months and when mortgage is redeemed the balance is as is, less the interest payments for the missed 3 months

...plus the additional interest (which you wouldn't otherwise have to pay) for the periods from the missed payments to the redemption date.

Thrugelmir

Skorpion said:

Thrugelmir said:

Going back to your original question. There is no saving. Just an additional interest charge that benefits your lender. If that's worth a bird in hand so be it. 

I do make a saving of around 900 over the 3 months and when mortgage is redeemed the balance is as is, less the interest payments for the missed 3 months, so im saving the capital over the 3 months once redeemed. 

The interest during the holiday period is added to the mortgage and compounds monthly. You'll simply have a larger debt to redeem in 3 months time.  

Skorpion

yes, debt paid for by the sale of the house whilst retaining 3 months payments amounts. Its the same thing i understand but better to have cash to hand given the state of things then continue to make payments to my mortgage when i know im selling.