Mortgage payment holiday - too good to be true?

JayZed

We're planning to take a 3-month payment holiday on my Nationwide mortgage (offered as a standard option in our flexible mortgage deal) as we've just had to get the builder in for an unexpected and expensive problem.

I've just been to see a mortgage adviser at Nationwide, because I wanted to know how much it's going to cost us in terms of additional interest. She says that it won't cost us anything - that no interest will be charged during the payment holiday and that both our outstanding balance and our monthly payments will not change - the only thing that will change is the end date which will be pushed back by 3 months.

Surely this can't be right? I can't believe that Nationwide is prepared to give me what is effectively an interest-free loan! I suspect that the lady I saw has simply got it wrong. Can anyone who's taken a mortgage payment holiday comment?

pollyanna24

Hmm, doesn't sound right does it? I haven't taken a payment holiday, so can only guess, but I have internet banking (and a mortgage with Nationwide) and the interest goes up each and every day, so I assume this would be the same even if there wasn't a payment going in on the first of every month.

maninthestreet

JayZed wrote: »

We're planning to take a 3-month payment holiday on my Nationwide mortgage (offered as a standard option in our flexible mortgage deal) as we've just had to get the builder in for an unexpected and expensive problem.

I've just been to see a mortgage adviser at Nationwide, because I wanted to know how much it's going to cost us in terms of additional interest. She says that it won't cost us anything - that no interest will be charged during the payment holiday and that both our outstanding balance and our monthly payments will not change - the only thing that will change is the end date which will be pushed back by 3 months.

Surely this can't be right? I can't believe that Nationwide is prepared to give me what is effectively an interest-free loan! I suspect that the lady I saw has simply got it wrong. Can anyone who's taken a mortgage payment holiday comment?

So they are effectively giving you a 3 month interest-free period on the entire mortage - this does sound very generous.

kingkano

Id say unlikely. Hope you got them to confirm that in writing because as you say its a fantastic free lunch!!!

Interest will still accrue on your outstanding balance as normal for those 3 mths. SOrry but I am not sure if they revise the payment during your fixed period or not.

Jonbvn

I honestly cannot believe that an interest free payment holiday exists. If it did, then everyone would be doing it continuously, and saving the mortgage payments.

poppy10_2

They're not just giving you 3 months mortgage repayments interest free, but effectively giving you 0% on your mortgage for 3 months. Sounds v. unlikely.

moneydoesgrowontrees

Sounds very unlikely to me. I work in a bank and set up payment holidays almost daily. Most mortgages these days are CID (charged interest daily). Even if they don't charge you this interest during the payment holiday, the balance should remain more or less the same (as no repayment has been made) but in the long run I would imagine you'd pay more interest on this, as it will be calculated on the entire balance. Don't take my word for it though, all banks are different. Check this with the call centre, they'll know more on this as they will run through it more often.

ManAtHome

T&Cs here http://www.nationwide.co.uk/mortgage/remortgage/flexfeats.htm - they do charge interest daily, no mention of interest under the payment holiday bit, but as they offer up to 12 months, I suspect it'll be racking up.

JayZed

I'd forgotten about this thread, but I subsequently checked with Nationwide on the phone and the outcome, unsurprisingly, was that she had got it wrong and that the interest does of course continue to rack up. They were a bit emabarrassed that she'd told me otherwise but sadly didn't offer to suspend my interest for three months by way of apology!

As it happens, I decided not to take the payment holiday anyway.

wymondham

if it sounds too good to be true then it probably is, as they say!

I suspect you'll pay this back one way or another...