Is a mortgage holiday worth it in the long run?

How do mortgage holidays work?

When you take a mortgage holiday it means you’re deferring the payments until a later date. Under the current conditions, you can apply for a payment break on your mortgage for up to six months.

Your lender will explain how the missed repayments can be made – this might be by increasing monthly payments for a fixed period, for example, or adding the total sum missed to the end of your mortgage.

If your remaining mortgage term is lengthy, the additional amounts may have less impact on your monthly repayment when you begin making payments again; however, taking a mortgage holiday will still cost you more in interest over the life of the loan.

Should the remaining time of your mortgage be shorter, however, your new monthly repayments could be significantly higher following the mortgage holiday as there will be less time available to repay the missed payments.

Also bear in mind that interest on the missed payments continues to accrue during a mortgage holiday. Sometimes lenders also offer the ability to pay only capital or interest payments for a period, to relieve the financial pressure on customers.

Formal debt solutions available in Scotland, such as the Debt Arrangement Scheme (DAS) or Scottish Trust Deed, could help you to restructure your other debts, thereby freeing up money to keep up with your monthly mortgage repayments.

For more information on whether a mortgage holiday may be worth it for you in the long-term, please call our team of licensed insolvency practitioners. Scotland Debt Solutions specialises in helping Scottish residents deal with debt, and can provide the reliable guidance you need.