Mortgage Holiday Breaks

pooliewap

I have a fixed rate discount mortgage with Halifax and I've recently looked into taking a mortgage holiday - I'm getting married and I wanted to have a bit of extra money. My initial understanding was that it would only 'cost' me an extra £10 a month on my mortgage for the privelege of 1 months break and I would incur no other penalties. But on receiving confirmation that my application has been accepted, it (unclearly) states that any break would incur interest on the payment at their variable standard rate (not on our discounted fixed rate: 7.5% vs 4.9%). Therefore, not quite as good a deal as first thought! And also rather misleading (see article from BBC: http://news.bbc.co.uk/1/hi/programmes/moneybox/4218595.stm).

So my question is, are mortgage breaks a good thing or just a con? Is a flexible loan a better option?

homer_j_3

Firstly, not all lenders work this way.

Your question is subjective. You have to realise that interest does accrue still on the mortgage whilst going through the break. You also have to realise that most lenders will want you to have overpaid before you take a break or underpay.

So is it good or just a con? Well I think that they are a great thing IF the client has a genuine need for them (maternity leave - wants to overpay and make no mortgage payments over Nov/Dec to help with xmas etc). Is it a con - yes if you have to pay variable rate and probably you may say yes if you hadn't fully understood the terms in which these holidays could be taken.

dunstonh

They are really an emergency facility for those in financial need. In a way its more like authorised arrears.

ChocksterNo1

Hi

I have a quick query I was hoping you could offer advice on, I've got an unsecured loan with Black Horse Finance, on occasions I've taken a holiday payment. Recently I was horrified to find out that on these occasions, 9 months has been added to the term of my loan? Is there anything I can do to complain as I wasn't advised of the outcome of this holiday payment, I would have never agreed to it had I known 9 months was going to be added to my loan.

Do I have to put it down to experience and not to have a holiday payment again, or is there some action I can take?

Any advice, greatly appreciated.

Thanks

poppy10_2

Did you sign anything when you took the mortgage break?