Has any taken 3-6 month moratorium on their mortgage at the beginning?

[Mortgageq1]

In the process of buying a house and as a part of the mortgage offer, we have been asked whether we’d like to take a moratorium of up to 6 months and our mortgage payments. I’m thinking I’d like to take 3 to 4 months. Just to ease us into being in the house so that we can afford to buy some furniture and bits and pieces, etc. It looks like it will only add on an extra 10 to 20quid to the monthly payment after that. Anyone else on this? posting here for traffic.

Personally i'd save the moratorium facility for a real life finance emergency, like losing one's job, or serious illness.

I don’t have a credit card. I don’t want apply for one now as it would change things for our application and so would a loan.

On job loss we would have redundancy at this stage as both permanent contracts. We have critical illness cover too which would cover the mortgage.

I suspect it's Ireland we're a deferred start or a 11 months payment rather than 12 are regularly available.

A deferred start simply means that you are repaying your mortgage over 3 months less than the original term.

Some people like the option is they have extra moving or furnishing costs.

It does however increase the monthly repayments and it does add to the cost of the mortgage as the interest accumulates for 3 months without any payments.

Financially, slightly silly to avail of it if you can do without but well worth it if you actually need to take it.

It's a huge no no in the first few months. Why on earth would you do that. It adds 1000s to your mortgage and makes the lender red flag you.

The lender offered It!! It’s a standard offering!

It really isn't. Be careful here.

@Londonrach1 no these don’t.
they simply start a few months later. Ours asked us and gave us up to 12 months to start. The 20 years starts then, not the original date. It’s a standard mortgage if your not in uk

Our offered up to 6 months…we will take 3 we reckon. They will still lend…it doesn’t make us a red flag

You'll be paying additional interest on the loan holiday FOR THE REMAINDER OF YOUR MORTGAGE

I'm sure you understand this

I would do it if: I was able to overpay for succeeding months and in effect bring the term of the mortgage down. I know it's not ideal but if you need to buy furniture and you are confident that you can "catch up" by overpaying and reduce the impact of the delay, I think it's worth considering. Only you know if it is affordable. As an example though, we did this with Barclays in the UK (albeit with a £90K deposit which might have helped) and then overpaid to reduce the term from 20 years to just under 15. It worked for us as we had little furniture and the house needed some attention. I accept that it doesn't / won't work for many people. You just have to make decisions that work for you. Just make sure you don't push yourself too close to the wire - you always need wiggle room if anything bad happens.

Yes I’m aware of that, we will however have a significant cash injection by Christmas so we will be paying a chunk off our mortgage then too…

Yes we had a 100k deposit. It’s our first and last mortgaged home (hopefully) and we want to have it right and done as soon as possible (for our own reasons) we will pay off another chunk by Christmas and will overpay annually from there on.

At 5% that adds almost £5000 to the total to be repaid.

Which is fuck all in the context of a mortgage.

Yeah, exactly my thinking, the rate is 3.75%.

I'd wait till Christmas to do your renovating. Just buy the bare bones before then ie dining table and chairs, sofa, bed. Get everything else after christmas.

The extra interest payments would be huge and all you're paying for is having your renovations done 6 months earlier. Is that worth many thousands of pounds?

Besides, it's good to live in a house before you renovate it as you get a feel for where and how you need things done

Actually that’s only the £20 extra. The three months you don’t repay (assume £5k) would also need factoring in - that’s an additional £8k. So £13k added to the total cost assuming 4%.

It’s a brand new house so not renovating..it needs to be completed…

Those three months don’t need to be factored in, the amount borrowed is the same.

Are you sure they are not just offering you a mortgage payment break under the Mortage Charter Scheme? It was introduced by the government during covid and doesn't show up on your credit rating. But you can only do it once ever. So best to save it for a time of real need.

Yes amount borrowed doesn’t change

No it’s a deferred start.

Which country are you in, OP? Knowing this would help.