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 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.

You can. but please bear in mind that you would then be paying interest on that payment holiday for years and years.

If you possibly can, it would save you a lot in the longer term to pay it off as quickly as possible. Overpaying by even a small amount would save you a lot of money over the term of the mortgage.

It's another of the unfairnesses of life, that if you can afford to overpay, you save such a lot. It's good to hear the possibility of overpaying in mind, so that if the opportunity ever arises, you can take advantage of it.

@Butchyrestingface and when would the tenant be making up the rent as the landlord would have to make up the mortgage?
Do you think people who own houses outright should let people live in them for free?

No, but if the mortgage owner is taking a mortgage holiday I would expect them to pass at least some of that onto the tenant during a global pandemic. Apparently my rental agency had something similar on their minds when they sent out an email advising tenants who were struggling to pay their rent about the possibility of the landlord taking a mortgage holiday.

Of course, like the OP, I didn't realise the banks would still be piling on the interest throughout. None of this applies to me, as a renter who has managed to continue working remotely through lockdown (touch wood it keeps going).

I think we need to have financial lessons on the school curriculum- learning about debt and mortgages etc. Learning how how much you pay leasing cars and buying on HP.

@JesusInTheCabbageVan

Don’t sign things you haven’t read and understood. Consider the 3k a stupidity tax

I always wonder how many people would be skint if there was an arsehole tax.

@JesusInTheCabbageVan, I think I you have won the Internet for the day .

There are going to be lots of posts like this.

The same people who would have posted if the bank did not pause their mortgage.

Barbaraofseville , you're spot on with the 5k . Which is for me , three months mortgage payments , so exactly what I factored in to pay back . But I knew that , and in my case will be overpaying it anyway .

think we need to have financial lessons on the school curriculum- learning about debt and mortgages etc. Learning how how much you pay leasing cars and buying on HP.

You're taught to read aren't you? Schools can't be held responsible for everything you don't like.

People saying it was all explained - it wasn’t. I know what’s going on with mine as I have a relative who works in mortgages, but the application for mine said nothing and the letter confirming we were taking a holiday said nothing.

This is going to be a major problem for many people who were not given clear information.

Fair enough the OP should have paid more attention to the terms but some of these comments are disgusting.

In a time of distress and panic it was a mistake that I'm sure many others made, and to be honest I think it's an understandable one in a country where the education system teaches us sweet fuck all of financial use in adult life.

**Is compound interest taught to all in schools ?

No.**

I taught it, I also taught how if interest is calculated at the start of a loan on the capital amount then as the repayments are made the rate of interest goes up each month as it ignores the decreasing balance. All the majority were bothered about was getting something they wanted when they wanted it.

@mrsBtheparker wow that was a bit overly sharp and un necessary. I was meaning that people seem to get in a mess and it would probably be a lot more useful than the things that are actually taught in maths. Yes I can read and I’ve always been very sensible with debt and finance, but a lot of people clearly struggle.

I thought the government told the banks to stop being greedy buggers and freeze the interest too?! (I'm paraphrasing of course)

No, but if the mortgage owner is taking a mortgage holiday I would expect them to pass at least some of that onto the tenant during a global pandemic.

So let's say the landlord lets the tenants off three months rent. They are an assured shorthold tenant with one year to go. Are you thinking they will pay back the the three months in one go in a years time, in addition to their normal rent? Or will the rent be increased for the last nine months of their tenancy, so they pay a years rent over nine months?

Those solutions would be OK for a landlord, I guess, but I'm not sure how much of a benefit they are to a tenant.

I suspect people advocating a "rental holiday" believe the that some of the rent owed should vanish, permanently. Because they wrongly believe some of the mortgage cost from a mortgage holiday has vanished, permanently.

A mortgage is a 25 year agreement, a tenancy is likely to be much shorter. Giving someone a 3-month break makes much more sense when you have 25 years to claw back the money, and security for the loan if you can't. A rental holiday, where you have to increase monthly payments by a huge amount in a short space of time to get the money back, and there's no sanction other than eviction and swallowing the loss if they fail to pay, is a fairly different kettle of fish.

This is going to be a major problem for many people who were not given clear information.

If they really weren't given the information then they will have a case before the Ombudsman (once the organisations own complaints procedure has been exhausted).

Oh dear! People never cease to amaze me!..... . I can see this becoming the next mis sold mortgage holiday scandal and people can claim compensation on.

Did you not read the terms that came with the holiday, or just thought it would be three free months?

I'm honestly not getting how someone could be that daft. Did you think the banks would give away three months off your mortgage? If they did that, everyone would have done it, and on any loans etc. It would have crippled every bank in Britain.

Even if it wasn't explained to you (which it would have been somewhere in the terms and has been online a lot), did you think you were being clever getting the holiday? How could you not see this?

It's not mortgages, loans etc they need to teach about in schools clearly, if so many people actually thought this. It's how to use their brains and not think you're being clever when you really aren't. I bet there's been people bragging about getting three months off their mortgage. It's just sad.

If they really weren't given the information then they will have a case before the Ombudsman (once the organisations own complaints procedure has been exhausted).

In most cases the terms of a mortgage holiday ( apart from being blitheringly obvious because the bank is not a charity offering you free money ) will be in the original mortgage documents. On our mortgage we can ask, at the lender's discretion, to take a holiday at any time under those terms.

an understandable one in a country where the education system teaches us sweet fuck all of financial use in adult life.
Schools teach you the basics so you are equipped to take reasonable responsibility for your own adult life. You just can't shift the blame away from yourselves because you couldn't be bothered to inform yourself and assess options.

l can see this becoming the next mis sold mortgage holiday scandal and people can claim compensation on

It'll have to join the queue behind complaints from people who didn't understand that they weren't actually paying off their mortgage if they took out an interest only mortgage. There have been people sadfacing the financial pages when the bank also expected them to repay the capital at the end of the term.

Banks have made pretty sure they are iron clad on this one. There is no chance of a misselling scandal this time.

“Did you think the banks would give away three months off your mortgage?”

I don’t think op thought she would be gifted three months mortgage (if only!). I think op assumed the three months would be tagged on at the end. Ie. If your mortgage finished on December 2030. It would now finish in March 2031.

Also, if she owed £115 (included the interest), she would still owe £115, not £115 + extra interest, ie. £130.

I can see this becoming the next mis sold mortgage holiday scandal and people can claim compensation on

Except where people have used an unregulated lender for their mortgage, it's much more likely that sharks will make a living out of charging to "bring cases" which they know stand no chance at all

All the info which has to be given is covered in the FCA regs and few lenders are stupid enough to ignore this, if only in their own interests
Unfortunately it'll never stop some claiming "I didn't know - I wasn't told" if they believe there's a chance of avoiding responsibility and saving a few bob, even in cases where lenders have included the information on the actual application form

It varies bank to bank if they extend your term or recalculate your repayments to clear it by your existing term.

I am with NatWest and we took a mortgage holiday, our term hasn't changed and our repayments will be changed.

I'm not sure why you didn't realise the interest though Op. I spoke to someone online who made it clear at least three times about the interest, then it was followed up by a phone call a week later, then a letter advising of the interest.

Ie. If your mortgage finished on December 2030. It would now finish in March 2031.
To be fair, you may be able to lengthen the term of the mortgage now so that the payments go back down to what they were before. It would be a new negotiation. But if you want it to end at the original end date, yes the payments will go up because you have more to pay off in a shorter space of time, and that's the default.

Oh did you think they would just forget about it?