Should my Mortgage Payment take a holiday?

Time off from payments with no strings attached. Great, right? Well, you get nothing for nothing and that is especially true when talking to a bank!

Well, if these breaks truly meant some time off from payments, with no strings attached, then they would be great. However, you get nothing for nothing which is especially true when talking to bank!

Let us break it down. If, for example, you had a £150K Mortgage at 3% over 25 years, then that would be £375 a month. This will be added on to your outstanding loan and it would also mean that you will need to carry on paying for another 3 months at the end of the term (unless you change the terms of the loan or re-mortgage). Plus, remember interest is still piling up.

The problem is that lots of people who do not need the payment holiday are applying for them, and that can cause problems. These customers are not being given advice by a professional, and because the banks are so snowed under with applications and largely running on skeleton staff numbers to review them, they are all being approved irrelevant of the merits and need of the application.

This causes 2 problems:

  1. Firstly, there are cases being accepted without question even when the advice is totally inappropriate.
  2. Secondly, the additional cost that is being absorbed by the banks for providing this often unjustified benefit will be bourn by everyone via increased bank charges and rates in the future.

If you do find yourself with a reduced income or a change in the terms of your employment, then a payment holiday could be the answer. It might not, however, be the best solution. Speak to an expert as soon as possible who can review your options alongside a number of other factors including: swapping to interest only, lengthening the term, raising additional funds or just finding a new great rate entirely. You should always make decisions knowing all of the facts and all of the options. It’s like taking your vacation without knowing where you are going. Sounds exciting, but it’s very risky!

Call us today

At Mortgage Matters Direct, we have a team of hugely experienced experts who are ready to share their knowledge and experience to ensure that you always get the most appropriate solution to your specific circumstances. We are all different and what’s right for some, may not be right for you. Let us help you discover your best option with a telephone review – e-mail and we will set up a call.

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