Payment Holidays and Selling House

Magic_Dragon

Hi Everyone

We are currently int he process of selling our house. We have just accepted an offer yesterday, so all is looking hopefull!

However, our fixed rate ends on 1st April .Our mortgage payments are shooting up from £540 to £842! (I/O mortgage with Halifax if that makes a difference)

Seeing as we are selling I dont think it would be practicle or feasable to think about re-mortgaging - would it?

I am currently on Maternity leave and this extra few hundred pound a month will hit us hard (although we will be able to pay it)

So we were thinking of taking a payment holiday for 3 months. Hopefully the house sale will be complete by then, and I will be back at work

What are the implications of this? I assume the payments we miss will get added on the balance. Or do they extend the term?

Any other ideas will be much appriciated!

dunstonh

Seeing as we are selling I dont think it would be practicle or feasable to think about re-mortgaging - would it?

Buying a new fixed rate would tie you in so no.

So we were thinking of taking a payment holiday for 3 months.

Does the lender allow authorised arrears?

What are the implications of this? I assume the payments we miss will get added on the balance.

The balance doesnt drop and you pay interest on the full balance and interest on that interest.

Magic_Dragon

Yes the lender will allow us to take up to 6 months payment holiday

Our mortgage is interest only so the balance doesnt drop anyway. What I am unsure about is if the payments missed/taken as a holiday, will be added to the balance. Or the term is extended to cover the amount

Basically I am trying to figure out roughly, how much will be left on our mortgage when we sell the house - if we take a payment holiday for 3 months

We can struggle on for the next few months until the house is sold, or take a payment holiday - I am not sure which is going to be the best option overall.

Finacially it would be easier for us to take a holiday, but I dont want it to end up costing us an arm and leg!

dunstonh

Our mortgage is interest only so the balance doesnt drop anyway.

It does and it doesnt. Each month an interest payment is added to your mortgage and the same day your payment cancels it out. When you dont make that payment the interest is added and the balance increases.

Next month there will be a greater interest payment added as the balance is higher and so on.

If you did it for three months the mortgage balance will be higher by a little more than 3 monthly payments.

Magic_Dragon

Thanks

That is what I thought really - my parter though the missed payments would just dissapear and wouldnt be added on to the balance (if only!)

Think I will wait until our house sale has progressed a little before applying for a holiday

Cheers