When is a mortgage holiday not a mortgage holiday

smallzoo2

This may be a naive question but I would welcome comments good or bad
When the first lockdown struck we took 3 months payment holiday with the halifax. After lockdown I agreed with them to pay £1000 a month rather than the normal £1300 for 3 further months. Then the 2nd lockdown started and I get a letter to say I have had the 6 months  holiday and they put my mortgage up to £1500.

I said to them in a nice way both via letter and phone call that it seems I was being punished for paying the £1000 rather than taking the further 3 month payment holiday as I would now have £3000 extra to pay the next 2 months mortgage. They said they understood but its just the rules , it was my decision to pay the £1000 but it still counted as a payment holiday and they cannot admit they are in error.

Do I just take it on the chin and say I made a mistake or should I take this further 
cheers

MattMattMattUK

smallzoo2 said:

They said they understood but its just the rules , 

It would appear to be in line with the rules.

smallzoo2 said:

it was my decision to pay the £1000 but it still counted as a payment holiday and they cannot admit they are in error.

It all likelihood they are probably not in error. One can take a mortgage holiday, then pay an amount regardless. What it would appear happened is that you took a second mortgage holiday as far as the law is concerned, but paid a reduced rate of repayment over those months.

smallzoo2 said:

Do I just take it on the chin and say I made a mistake or should I take this further 

The first question is do you genuinely need a mortgage holiday, or are you just taking on because it is available or as a reaction to lockdown? If you are just facing the 20% furlough drop then you should be able to still pay your mortgage, or if you are not facing a drop in income then taking a payment holiday is normally a very bad idea.

The second key question then becomes will you default on your mortgage without a payment holiday. You are not able to get further extension at the moment, but the banks will be reasonable, so they may agree something which is not a payment holiday, but does help, perhaps allowing you to switch your mortgage to interest only for example. 

foxy-stoat

You should of taken  another 3 months break, kept the £1,000 a month in the bank and used the extra £3,000 to make over payments when your back at full income.

If you can afford the £1,500 now then just pay that as you are not losing money, you are just paying more off your mortgage.

Shop around when your fix is up and get back down to the lower payments.

smallzoo2

I guessed I was just a bit dumb..ah well you learn with life. I am self employed so only small SESS payment so unlikely to be able to get another mortgage , only 2.5 yrs left on the mortgage

enthusiasticsaver

It is coming off your mortgage so you are not losing anything.  Did you actually need the payment holiday? 

Thrugelmir

smallzoo2 said:

 only 2.5 yrs left on the mortgage

The deferred arrears have to be paid over the remaining contractual term of the mortgage. There's no punishment involved. 
If you had had twenty years left then the impact would have been much lower. 

RelievedSheff

The term "payment holiday" is very misleading as it is not a holiday at all. You are just deferring the interest for 3-6 months. You still have to pay the amount back.

It will also show on your credit files that your balance owing increased which will alert any future lenders that you took a payment holiday.

Payment holidays should only be used as a last resort, they are not free money!!

yksi

You've had six months of special arrangements (whatever name you want to give it) so they've met their legal conditions and don't have to give you another three. But they are now, as of yesterday I believe, required to discuss a tailored arrangement with you if you are in difficulty and not able to keep up with payments. If this applies to you then use the word "tailored" when speaking to them and ask for that new assistance. Don't do it unless you have no choice though because in the long run it will cost you more.

foxy-stoat

RelievedSheff said:

The term "payment holiday" is very misleading as it is not a holiday at all. You are just deferring the interest for 3-6 months. You still have to pay the amount back.

It will also show on your credit files that your balance owing increased which will alert any future lenders that you took a payment holiday.

Payment holidays should only be used as a last resort, they are not free money!!

I agree its not a holiday - its a break from paying all or part of your committed monthly payment.   
Nothing on this thread is stating that the payment holiday/break is free money.

smallzoo2

I am not saying its free money..Im not stupid 

I was just questioning whether part-payment classed as a full payment holiday under the rules. Anyway from the various comments it seems there is no solution..whats done is done

Thrugelmir

smallzoo2 said:

I was just questioning whether part-payment classed as a full payment holiday under the rules. 

No it wouldn't. The full monthly amount due is contractual. Anything less is technically a default and breach of terms.