Mortgage holiday - a good or bad idea?

[ValiumQueen]

Hi, I am due to have DC3 in October, and plan to have ten months Maternity Leave. I qualify for OML for 6 months which is a reasonable amount, but for three months I will be on SMP and 1 month with no income.

DH is employed on a sessional basis, with minimum wage. We will qualify for Tax Credits, but I think we should take a 4 month Mortgage holiday for these months. DH is very against this.

I do not see adding 4 months to the term (effectively) will make much difference on an 20 year mortgage. Is there more to it than that? I figure it would be worth it for peace of mind for me. I do not want to have to go back to work sooner, as I only had 6 months with my first two, and want to enjoy what will be my last Mat Leave.

Thank you for your feedback.

Assuming your lender is OK with the idea of a mortgage holiday in principle I'd suggest talking to them and asking them for a calculation that shows what effect it would have on your balance or long-term payments and if there are any penalties or restrictions. Your DH may be happier if he has something in writing.

Good point thank you.

Just to check you're aware, tax credits are based on your full annual income so you would be receiving them for the full year not just for the 4 months if that makes sense.

Sorry if that's really obvious but a friend of mine thought she would be eligible while on maternity leave as her DP's salary plus her unpaid 3 months were under the threshold, she didn't realise it took into account the previous months and the months she would be back to full salary :)

Yeah thanks rockchick my pay is shite at the best of times

It is a shame I cannot have more on those 4 months though, when we really need it. It would make sense, but it is confusing enough a system as it is!