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!!

If you needed it, you needed it. The cost is high, but it's a necessary evil.

Banks may have made the conditions clear, but they were also actively encouraging people to do this. I recall receiving a couple of emails/texts from my bank (Natwest) telling me that they were 'there to help' if I was struggling with my mortgage or loan

Banks have moved a long way from being the friendly bank manager in the cupboard who had the customers' best interests at heart (if anyone is old enough to remember that ad? No, just me then..)

Those days never existed. The ad may have. But like all advertising, the word "bollocks" was implied. As it "What a load of ..."

I had assumed

It's a mortgage, probably one of the biggest financial commitments of your life, why would you assume and not check?

I have a friend who thinks that her 'rent holiday' means she will just be let off those 3 months 'because the landlord could get a mortgage holiday'.

OP - I hope you can manage to pull yourself out of this. Tough times.

Have to admit - I would have thought the same as you - that this would be an arrangement which only added another X months onto the end of your mortgage, not a great lump of extra interest to be paid!

I think that's iniquitous!

Fkn hell, gone are the days when you could post on mn for advice or soothing words when having a shit day! People seems to just jump at the chance to make people feel even shitier than they already do. For what its worth OP i thought when morgage holiday was first mentioned that you would just have 3 months extra payments at end of term,, even martin lewis wasnt very clear of the details at the start and advised only to do it if necessary as it could affect you when remorgaging. As weeks went on this changed and advise changed, it has probably been in your terms and conditions but the way it was portrayed through media was totally misleading. 3 grand does seem a big amount though but perhaps im just a naive simpleton among the many oracles of mumsnet!

Oh dear.
Naturally the payments eventually have to be repaid and also any interest added on too. Otherwise everyone would take a mortgage holiday.

The whole point of one is to help people that cannot for whatever reason pay their mortgage at the moment.

Therefore you are being unreasonable

Must admit, I thought the three months would be tagged on at the end.

(Didn’t take a mortgaged holiday)

But why iniquitous ? The money is still owed , and interest has to be paid on it. If there are no repayments then of course the interest will increase . It’s basic maths . I did the same as the OP for a similar amount and it was made abundantly clear this would happen - they even gave me a ball park repayment figure. The interest rate wasn’t reduced to zero which is the only way that I wouldn’t have paid the extra £3k .

Fkn hell, gone are the days when you could post on mn for advice or soothing words when having a shit day! People seems to just jump at the chance to make people feel even shitier than they already do

If it has the effect of causing some people to now be aware and not make the same mistakes, is that not worth it in the long run ? Or is it better the OPs upset is all for naught ?

This is the reason why we didnt take a mortgage hoilday and just plugged through.
Its not free, it wasnt a break else everyone would of gone yeyyy mortgage hoilday lets have 4 months off paying

I think you need to contact your lender and explain that you didnt understand what it entailed when you took the hoilday, it wont make much difference you still owe the 3k and pray that it wont effect your credit rating in the future.

*Is compound interest taught to all in schools ?

No.*

It ought to be, and it was part of the O-level syllabus back in the early 1970s, when I took mine.

It must have stopped being taught soon after that though, my BIL is 10 years younger and I had to draw him a graph to show him how come an interest-only mortgage cost more overall, even if the interest rates were the same.

I assumed it meant tacking those months to the end of the mortgage date. Lucky I don't have a mortgage or I might have applied!

It's surprising though that people could apply for such a thing without having it made crystal clear what it entailed. If I were you OP, I'd look back over the paperwork.

Compound interest certainly should be taught to all in schools. It's in the maths GCSE. Not specifically in relation to mortgages, as the GCSE questions are usually about savings accounts, but we do teach compound interest. There's a really good course on offer at most sixth forms, called core maths, and that covers lots of financial stuff as well as statistics for real life. I highly recommend it!! Teenager don't necessarily remember everything they learn at school to be able to put it into practice many years later in their own lives.

OP, you were naive, but what's done is done. I'm sure you should have been made aware that you would need to pay this extra interest. But again, human nature is such that we don't always read the small print, and if you were worried about how to pay the mortgage while not earning as much then I'm not surprised you've missed this. Lots of people will be having the same surprise as you. Like other people have said, each payment won't go up massively because of this, you'll pay it over the whole term of the mortgage.

I learned about compound interest in primary school, but seeing as there's all manner of calculators on the Internet and the likes of Martin Lewis publishing easy to understand personal finance advice, no-one really needs to understand the calculations, it's pretty obvious that a payment holiday will add to the cost of a mortgage, so should only be used if you need to as it's an extra cost, not cost free or free money.

Have you looked at his much your monthly payment will change by, not the interest figure. I took a 3 month break and my mortgage will be increasing by £6 per month. It was worth the break even if it does cost more overall.

You must have known there would be some affect, the application was clear. My son chose not to take one, he was fortunate to be able to but they made it clear not to touch it unless absolutely forced. He was also told it could affect his credit rating and ability to remortgage in future.

It can be a shock but agree with the others who say you can offset that by making overpayments each month.

@ProfessorSlocombe You can tell people they fucked up and give advice without being a bitch about it though.

Don't worry OP, all the people screaming that "landlords" should offer a rent holiday because they qualified for a mortgage holiday themselves completely missed out on that small detail too.

You really are not the only one.

It would have also made sense for having a choice about payment of these interests, or at least to have it clarified how they would be spread, or due.

It's easy to mock, but insight is such a wonderful thing, and people forget the stress and urgency that can make ALL OF US make mistake.

I think it had a bigger effect on people with less left on their mortgage. My dp has taken out a mortage in the last 2 years, payments now up by £9 after a 3 month holiday. My dad has less left on his mortgage, amd has an extra £35 to pay each month.

The more you have left the more payments they have to split the 3 months over.

Well to be honest yes you were naive but clearly needs must have made you do it. There’s no point in worrying about 20 years time when you may not have been able to pay your mortgage this month.

It’s not ideal but that’s their ‘return’ I suppose did giving you the time off.

They should have made it clear though as clearly it’s come as a shock to you

We took a 3 month mortgage break and our payments have gone up by £7 a month for the remaining term.

Granted it's not a big mortgage and we have 12 years left on it.