Aibu to consider taking a mortgage repayments holiday?

Thunkedit · 2023-08-29T11:45:40+00:00

in my specific circumstances. posted under a different username before but now that the gov have said that they want mortgage lenders to let people switch to interest only without repayment vehicle in place and or let them take a repayment holiday without it affect credit rating. my mortgage is due in Jan and after the latest spike secured 5.93 and was going to pay down some balance as opposed to paying my htb but given inflation has fallen now lower than expected and the gov looks like it’s only track to bring it to 5% by the start of next year. Rates should come down (rates are based on swaps which is linked to inflation) yes they won’t be 1/2 % like I had before but it should be less than 6. surely in this circumstances kicking the can down the road to June next year makes sense? *Title edited by MNHQ, at the OP's request.*

Zhougzhoug · 29/08/2023 12:48

Our financial adviser is quite pro people going on interest only as long as your other investments make sense. We're on one at the moment which protects us from some of the current craziness but we also voluntarily overpay. If you have proper advice it can work but probably best not to see it as "kicking the can down the road".

Overthebow · 29/08/2023 12:51

5% inflation is still higher than target so it’s unlikely interest rates will come down before end of next year. Interest only makes sense if you are struggling to pay the repayment mortgage, but I wouldn’t go on it if not.

Original poster

Thunkedit · 29/08/2023 12:51

Zhougzhoug · 29/08/2023 12:48

Our financial adviser is quite pro people going on interest only as long as your other investments make sense. We're on one at the moment which protects us from some of the current craziness but we also voluntarily overpay. If you have proper advice it can work but probably best not to see it as "kicking the can down the road".

I don’t have other sizeable investments, definitely not enough to cover the balance of the mortgage. I definitely want to be on capital repayment long term but basically breathing space to get a rate that’s more comfortable

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MNHQ

LivMumsnet · 29/08/2023 12:53

Hi @Thunkedit , we've now edited your thread title, as requested. Hope that helps.

Original poster

Thunkedit · 29/08/2023 12:54

Overthebow · 29/08/2023 12:51

5% inflation is still higher than target so it’s unlikely interest rates will come down before end of next year. Interest only makes sense if you are struggling to pay the repayment mortgage, but I wouldn’t go on it if not.

They’ve already come down a bit from when I fixed. Inflation now is above 5% but that’s the target for the end of the year. By 2025 back in line with BoE target.

yeah they won’t be 2% by mid next year but maybe more 4.5/5. So a repayment holiday wouldn’t be horrendous. We did the 3 month one in covid and it only added £5 a month to our balance

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MadelineZott · 29/08/2023 13:08

As long as you have a plan then it seems reasonable. I took a repayment holiday when I had a year out of work to train for a different career. I knew I'd be able to make up the payments later and thankfully the bank agreed.

Overthebow · 29/08/2023 13:16

Thunkedit · 29/08/2023 12:54

They’ve already come down a bit from when I fixed. Inflation now is above 5% but that’s the target for the end of the year. By 2025 back in line with BoE target.

yeah they won’t be 2% by mid next year but maybe more 4.5/5. So a repayment holiday wouldn’t be horrendous. We did the 3 month one in covid and it only added £5 a month to our balance

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Mortgage rates have come down a bit, as everything settled down, but interest rates rose again this month. They are forecast to rise again and not to drop for a while yet, so it’s unlikely mortgage rates will fall and may rise a bit again in the short term.

Original poster

Thunkedit · 29/08/2023 13:23

Overthebow · 29/08/2023 13:16

Mortgage rates have come down a bit, as everything settled down, but interest rates rose again this month. They are forecast to rise again and not to drop for a while yet, so it’s unlikely mortgage rates will fall and may rise a bit again in the short term.

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Yeah it’s a pressure cooker at the mo isn’t it

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Original poster

Thunkedit · 29/08/2023 13:25

i think my best bet is to run a rate check again close to the point of expiry or when we here rated have dropped again

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CatsOnTheChair · 29/08/2023 16:02

Are you taking about needing to do this? Or using the money to pay off a different loan in place of the mortgage, or just delaying taking out a new fixed mortgage?
Whatever you don't pay now, you will be paying interest on for the rest of the life of the mortgage.

Original poster

Thunkedit · 29/08/2023 17:22

CatsOnTheChair · 29/08/2023 16:02

Are you taking about needing to do this? Or using the money to pay off a different loan in place of the mortgage, or just delaying taking out a new fixed mortgage?
Whatever you don't pay now, you will be paying interest on for the rest of the life of the mortgage.

A combo of b and c, my ideation was waiting for a new fix rate and using my lump sum to pay off my htb rather than pay down the balance

we did the repayment hols in covid but that worked because it was only 3 months at 2% rather than 6 at whatever svr is now

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