When we have a mortgage, we will be expected to pay money each month for it. With an interest only mortgage that will just be the interest on the mortgage but with a repayment mortgage that will be the interest plus some of the outstanding balance. Some mortgages are flexible though and will allow you to take a payment holiday at times. This means that you will be allowed to stop making payments on your mortgage for a while so that you have more money for other things. You may therefore consider taking a payment holiday so that you can take advantage of this. It is worth thinking this through though to make sure that it is a wise idea.
Impact on Your Credit Record
It is important to know that if you take a payment holiday on your mortgage it will show on your credit report. This means that even if it was fully approved by your mortgage company and part of your terms and conditions in the mortgage, it will show up. It could impact you if you want to take out another loan, if you want to change lenders or even if you want to start renting a property as your credit report is always checked in these situations. This means that you might want to consider your future and whether you have anything planned that this might impact.
Repaying it
It is important to remember that when you take a mortgage holiday you will need to repay the money at some point. This means that you will need to think about how you will do this. It might be that your lender will add it on to the end of your mortgage so that it will last longer or that they will add it to future repayments so that you have to pay more. Make sure that you look this up so that you can find out what the situation will be, then you will not have a surprise. Think about whether the method you will use will be something that you think will suit you. It can be easy to forget that you will have to repay this money from the payments that you miss, so make sure that you do not forget and you find out how they will need to be paid.
Having Extra Money for Now
The advantage of missing the mortgage payments means that you will have more money available for other things. You will need to think about whether you feel that t is worthwhile. If you are in a temporary situation where you need extra money, perhaps because you are out of work or have a particularly large cost for some reason then it could be helpful. However, you need to be aware of the disadvantages above and it could be a good idea to think about whether you really need the money and if you do, whether there are any alternatives things you could do. You might be able to spend less money elsewhere, find ways to earn some extra money, get an additional loan or something else. Consider whether there are any options which might be better for you, both with regards to the cost as well as the future implications.
It is a tricky decision and one that you should take a lot of time thinking about. We may find ourselves in a bit of a panic because we need money and so we need to try to remain calm and think through all of our options to make sure that we are making the right decision. Perhaps even considering talking it over with someone else could be good as they will be in a calmer mindset and therefore should be able to help you see things more clearly.
