Should you take a mortgage payment holiday: 3 things to consider
In episode 265 of The Money to the Masses podcast Damien talked to Will, a mortgage expert at independent mortgage specialist Habito. Damien asked a range of mortgage-related questions that had been supplied by members of the Money to the Masses Facebook community group and our newsletter subscribers.
In this article, we cover 3 key questions to consider when taking a mortgage payment holiday.
1 - Should you take a mortgage holiday?
A mortgage is a great way of buying a property, but in reality, no one really wants a mortgage; they actually want the house. Will's advice is to always get rid of a mortgage as soon as you possibly can. So if you're in a position to keep paying your mortgage, then he'd recommend that you continue doing that. If you are struggling financially however, you may wish to check out our article 'How do I take a mortgage payment holiday and will it affect my credit rating?'
2 - If you take a mortgage payment holiday, do you have to pay it back?
If you take a payment holiday, you would still need to pay the money back and that will need to be discussed with your lender.
Typically the way you'll pay the lender back after a mortgage holiday is in one of two ways:
- Extending the mortgage term. So for example, if you took a three month payment holiday, then your mortgage term would be extended by three months.
- Adjusting the mortgage repayments. You would agree with your mortgage lender an increased repayment amount in order to catch up the missed payments.
3 - What are the alternatives to a mortgage payment holiday?
Try and avoid taking a mortgage payment holiday if at all possible, but it's a great option to have if you're struggling or if you've got concerns about your job or the future. So, go for a payment holiday if you absolutely need it, but if you're concerned, it might be best to speak to your lender as soon as you can to explain your position.
There may be other options that they can offer you, such as:
- A temporary reduction to your mortgage repayments
- Perhaps your lender would allow you to only pay the interest part of your mortgage so that you're at least still paying some back and not falling behind on the interest.
To watch these questions being answered check out the video below, or alternatively, check out the full Q&A video here.
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Will answers this and many more mortgage-related questions on episode 265 of The Money to the Masses podcast. Click on the media player below to listen.
You can also listen to other episodes and subscribe to the show by searching 'Money to the Masses' on Spotify or by using the following links: