MORTGAGE HOLIDAY CHECKLIST: Here’s what you need to know before you hit pause on those repayments🤚

The term “mortgage holiday” might sound attractive, but in reality it should be seen as a last resort if you’re facing financial hardship from circumstances like losing a job, or an unexpected illness or injury.

For borrowers considering a mortgage holiday, it is important to understand the terms of the agreement as well as the potential long-term consequences. It is also important to remember that a mortgage holiday is not a long-term solution, but rather a short-term relief for borrowers who are struggling to make payments due to unexpected financial pressures. 

Hitting pause on your mortgage repayments can definitely provide some much needed breathing space, but since payments are only suspended and not eliminated, you will still be required to pay back the missed payments at a later date. This will cause the total amount of your home loan to increase and while you take a break from your mortgage repayments, your interest charges will still continue to accrue which will also add to the overall cost of the loan.

Something else to bear in mind once the mortgage holiday comes to an end, is when you resume your mortgage repayments you could be faced with a higher repayment amount.  This is so you can catch up on your missed payments. Also you’ll end up paying more interest over the term of your loan because the cost of your mortgage will end up being higher either due to more accrued interest or a longer repayment term.  So as you can see, this type of short term relief option may actually end up costing you more in the long run.

So if you need to get creative with ways to minimise the cost of your mortgage, here are some alternatives to explore before considering a mortgage holiday:

✅ Consolidate high interest loans into one loan at a lower interest rate

✅ Extend your loan term to minimise repayments 

✅ Go interest only on your loan - it is usually better to pay at least the interest portion of your mortgage, rather than opting for a full mortgage holiday.

✅ Refinance to a lender that offers a cashback incentive which could help to subsidise your repayments. 

🤚Taking a break from your mortgage repayments could provide some much-needed respite, but the key here is not to wait until you’ve missed a payment to ask for help.  If you think you might miss or have already missed a home loan repayment the best thing you can do is act now by getting in touch with us. 

It's important that you reach out early enough so I can find a suitable solution to help you get back on track.

You don't have to try and manage it all on your own, so get in touch for a no obligation chat, we are here to help.