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!!

@Localocal

Banks are generally taking the payments you should have made and spreading them out over the remainder of the loan period, added to the regular mortgage amount. I think you can ask to extend the loan period instead, so if it was due to be paid off in June 2030 and you took three months mortgage holiday, it would be paid off in September 2030 instead. But it's up to your bank if they want to offer that option. All of this should have been made clear to you by the bank - I'm sorry if they didn't explain it at the time.

DisobedientHamster - if a landlord gets a mortgage freeze for a buy to let property they are supposed to offer a rent freeze to their tenant.

Provided the tennant sets up a payment plan to cover the arrears.

I took a three month payment holiday on a loan and on a zero interest credit card

I appreciate that these are businesses but the Coronavirus wasn’t anyone’s fault and any extra interest should be waived. I can’t believe that by missing three payments you’ve accumulated and extra £3000 .... do you have a mortgage on a small country ?

£3k for a 3 month holiday seems extortionate.

@Gulabjamoon

* £3k for a 3 month holiday seems extortionate*

How can you say that when you don’t know amount nor mortgage rate?

I've taken a mortgage holiday and will use it to pay off a credit card bill and help my son with his student accommodation rental. His part time job disappeared and I'm the guarantor so I don't have a lot of choice. As a result I'm not overly concerned about an increase in my mortgage,if I could have avoided it I would but it's been a unique set of circumstances.

There has been a multiplicity of calculators on bank, building society and money advice websites for you to work out what a mortgage holiday would mean. Your bank/BS would also have talked you through the ramifications when you applied. I switched products last year and spent more than an hour on a video call with an advisor as she made sure I understood what I was taking on. I can't believe that you were not similarly advised.

I am surprised that banks didn’t give you the actual figures up front rather than T&Cs that some people do ignore or don’t understand fully to be honest. One bank, is it Barclays, have a sliding switch for credit card payments which I think is an excellent idea or showing people exactly what financial decisions mean in real terms.

Hopefully the monthly payment is manageable OP. I too would probably have gone ‘wait.. what!’ seeing that figure.

Oops crossed with @AnnieHawk I didn’t know there if were calculators available.

talk about kicking a person when they are down ,yes inform someone but some of you are just being plain nasty , some remarks can make someone wanna top themselves WHATEVER HAPPENED TO THE KIND CARING PEOPLE THAT WERE HELPING EACH OTHER THROUGH THIS DIFFICULT TIME

Naive ... financial cock up .... what’s up with you lot 😂😂 we’ve added like £10 onto our monthly payments after the 3 month break. We are definitely not naive, quite happy we got the break, and it was very much needed. We also knew what we were doing. Some of you need to climb off of that high horse and grow up 🤣🤣

Dingdong99 I'm so sorry you've been caught out in this way, and don't think you will be alone. People responding here often seem to enjoy other people's misery......ignore them!

I know of several other people, who very worried about their role, money, family took mortgage holidays without really understanding the implications. Perhaps you could contact your mortgage lender and see if they could help you in some way?

Anyway, I hope you manage to sort things out.

I think that's o ky the case if you would not be able to make any early repayments. I. E. If your regular payments are £1000 a month, so you are taking interest on 3k for 30 years... But if you can pay a bit early I. E. £1500 a month for 6 months (to oay your mortgage plus the 3k you did not pay during these 3 months) then you would not owe that much more.

Lender should have explained it better .My daughter luckily worked it out and we paid her mortgage whilst her husbands hours were reduced but it was only for a short time in her case

If you don’t understand how mortgages work, and/or you can’t or won’t read the paperwork sent to you (which these days is written in a pretty straightforward way) you should not be taking out a mortgage in the first place. It is a huge, serious financial commitment and as such it comes with conditions and protections for you and for the lender.

Yabu. Start reading paperwork associated with contracts you are signing up to, particularly big contracts like mortgages. Playing ignorant or stupid afterwards isnt an excuse for an adult. Who did you think would pay on your behalf? The bank let you live free? The government?

For those wittering about tenants expecting a rent cut if the landlord took a payment break - we gave our tenants one month free followed by 2 months at 50% rent to help them out. They were self employed but not eligible for the grants so had to apply for universal credit. We took the mortgage holiday to afford this knowing full well the interest would be added and the monthly payment would increase slightly. But hey if you can only think of money when others are losing their livelihoods there is something wrong. Also if you shit on people when they are down they won't hang around - and we stand to lose more with an empty property for a few months plus agency fees etc than we would by doing the right thing!

Jeez. Why be so mean!?

Woahhhhh! I think that if people have had to ask for a mortgage holiday, then there is a pretty good reason for it - to attack the person saying they are naive is pretty severe! After all, mortgage companies have been clamouring over themselves to make the offer and yes, when you actually read the small print - very hefty amounts added in. However, when your back is against the wall and you are facing disaster, I am sorry, but you will take the easiest route with what you think is a trusted partner (e.g. a national bank) but then when faced with the price -this is when reality kicks in. Shame on the banking institution and not on the people needing help and support

I took a mortgage holiday and won’t be paying anything extra, because I simply opted to add the three months of payments I missed onto the end of my mortgage. Did your bank not give you that option?

Is compound interest taught to all in schools ?

Compound interest is indeed taught at GCSE but realistically there are some students taking the lower level Maths paper (Foundation) for whom it really is a step too far that they never grasp

Lots of people have been confused about this OP, and I can't imagine why anyone on here would choose to be so unkind to you about a misunderstanding. Totally unnecessary rudeness. I hope you don't struggle too much financially.

The reality is that no matter how simple you try to make the language, financial products are very complex and require a certain grasp of both English and arithmetic to understand. Hence some people will never be able to understand them. What is the answer to this? Very difficult to answer from a policy perspective. What might help would be to try to install a more critical approach to advertising and marketing, starting with children. “If it sounds too good to be true, it probably is” etc etc and the general idea that borrowing money is always more expensive, due to interest. Given that capitalism thrives on manipulating gullible customers, though, it seems unlikely that anything will change. I know I have taught my kids to be cynical right from day 1. Shops, banks, credit providers, betting shops etc are not your friends - always think... what’s in it for them?

@letmethinkaboutitfornow hopefully you should get a letter soon. We had one from Nationwide yesterday, we will owe £269 in interest and our mortgage payment will go up by £3 a month. I have £51k left on a 15yr term, so it's minimal for us. Not getting an extension though, even though DH is furloughed til end of July, spent less in lockdown than I thought so will try to make the regular payments. However, rates have just gone down, so thinking of switching to a fixed-rate

It’s the wording that’s the issue. ‘Holiday’. Anything but.... government should have enforced no extra interest. I too assumed it would be as the dictionary says....’ a short period during which the payment of instalments, tax, etc. may be suspended.’

When Boris announced I thought well there’s a good solution to having no money for a while. Too busy palling up to the public and sounding like the solution. Actually not only not a solution but placing people in more financial difficulties.
Many people listen to the words ‘mortgage holiday’ and they want to believe it as they’ve little choice. Eyes shut on the roller coaster..... it’ll be ok. Not their fault.

@aoneandatwo you will be paying more, unless the interest was frozen.
Those three monthly payments - added to the end of the loan, but in interest will be accruing on them.