Took a mortgage holiday and now I owe a shed load more!

[Dingdong99]

This is probably very naive of me but I had assumed that if you take a mortgage holiday, your mortgage would be frozen

I've had a 3 month mortgage holiday because of everything going on, and have now restarted again, and had a statement come through to say I owe an additional 3k!!

Yes, because you’ve accrued interest on the money you owe.

Sorry, yes that was naive but I’m sure you won’t be alone. I do think the lender should make it clearer.

How long does your mortgage have to go, still? You could be borrowing eg £3K over 20 years. Once things get on an even keel, try to pay a little extra each month.

It's been well publicised that you would pay additional interest, so yes you have been very naive! Martin Lewis was very clear on this, he said only do it if you really have to as the interest would be added on to the rest of the mortgage.

That should probably have been more clearly explained to you. If you can spread that £3k out over the remaining term of your mortgage you can hopefully deal with it by paying only a little more each month.

I made that mistake years ago on maternity leave. Is it much more per month?

YABU

Very naive to think you wouldn’t have to pay interest. But presumably it was the least worst option in a shitty situation?

This is probably very naive of me but I had assumed that if you take a mortgage holiday, your mortgage would be frozen

Did you bother to read any of the details when you applied, or was your mortgage company misleading. I doubt they were - they're not stupid, but if you collect everything you were given when applied for the holiday, you might be able to complain.

They must have explained that to you when you applied for the holiday?

Yes, that’s how it works

It is a lot extra but don’t worry. Let all this blow over for a year or two then start overpaying? Or even if you start paying after 5 years it will always help.

So you didn't read the lenders written explanation before you took the mortgage holiday.

I'm sorry to sound daft, but why is there additional interest? Why is it more than what you've initially borrowed, is it because your term is extended by 3 months? If you were to slightly over pay (basically the equivalent of 3 month) over that period, wouldn't that remove the additional interest?

@Dingdong99 - OP
Could you please check wether they took the three months payment and split evenly across the remaining period?

I know it can look confusing but there is no added interest as they are taking the months you didn’t pay (including interest) and splitting evenly across for each remaining payment so it means your monthly payment goes up but not the overall.
If you are in doubt, contact them online ☺️
Good luck 🍀

I think you must not have read the terms and conditions of the mortgage holiday if this has come as a surprise to you. It is clearly shown on the information on my mortgage providers page about taking a mortgage holiday.
I also did a random search on 4 other mortgage providers and again it is clear as day usually within the first couple of sentences.
You can't really complain if you did noyt bother to read what this meant.

YABU. Of course you are paying more because you have extended the period of the loan.

Did you need it or did you do it just in case? Have you saved any of the payments, could you make an overpayment. now?

Why is it three thousand though? Is your mortgage massive?

Duh. LOL @ thinking banks offer free money or freeze interests on the asset they own. Did you lose your job or were you furloughed or became ill? Because taking it for any other reason, it's an expensive lesson to learn. But well, you agreed the terms and conditions. Read the small print.

🤦🏼‍♀️ Did you think it was free money?
People astound me. Don’t sign things you haven’t read and understood. Consider the 3k a stupidity tax

Oh, that's nothing, Nixen, this one caller rang into Martin Lewis complaining that because her landlord had taken a mortgage holiday she shouldn't have to pay rent. Hahaha!

OP, your mortgage will contain any element of interest (of it may even be interest only, I don’t know, but it won’t have no interest)

Every month you will pay off some interest. If you don’t pay it off, it accrues. You have also extended the term if you mortgage by 3 months, so you will be paying interest for longer.

Yeah, sorry op but you were still going to accrue interest

Sounds like you have a similar mortgage to me then , because I’ve had to do the same as DHs wages tanked . It sounds a lot , but it’s only three months interest . How much time is left on your mortgage ? We’ve got about ten years , and our repayment is only going up by about £40 when we restart it .

This is why despite me being furloughed for a while DH and I decided against taking a payment holiday from anyone.

The debt doesn't disappear, it just becomes a problem for another day. Same goes for gas/electricity/water etc.

I know for some people it's been a lifeline with no earnings, but I think even if it means cutting back massively it's better to keep paying if possible.

In your case Dingdong99 you can reduce the £3k which will presumably be interest over the life of the mortgage by making overpayments.