[Finance] Mortgage Holiday

[Official Old Man]

It's me again moaning about finance.
I've been offered a mortgage holiday by Natwest but the cost of it is astronomical.
Basics. 2y 4m left of mortgage.
Paying £1480.31 month.
If I take a three month holiday the new monthly cost is £1724.45. An increase of £244.14 a month or a cost of £6103.50 over two years one month.
Put another way.
I'm not paying £4440.93 (3 x £1480.31). The cost of paying back £4440.93 over two years and one month is £6103.50 now take one from the other leaves £1662.57 interest on a £4440.93 loan payable over 2 years 1 month.

That's criminal.

 

[hans kraay fan club]

If you are suggesting that those monthly sums (in each case) will remain the very same until the end of the mortgage (won't they go down, as the interest element falls, as the outstanding sum decreases?)

If they DO remain the same, then the additional payable figure is much higher than you've calculated.

£1480.31 x 40 months = £59,212
£1724.45 x 37 months = £63,805

(£4592 extra)

 

[Icy Gull]

WOW, I no longer have a mortgage so am not up to speed on what the deal is, but I just assumed it would be 3 months holiday and then three months added to the current mortgage end date

Maybe I’m being naive here

 

[Official Old Man]

My mistake. I've 2 years 4 months remaining.

 

[Driver8]

My mistake. I've 2 years 4 months remaining.

[emoji23]. Result!

 

[hans kraay fan club]

WOW, I no longer have a mortgage so am not up to speed on what the deal is, but I just assumed it would be 3 months holiday and then three months added to the current mortgage end date

Maybe I’m being naive here

I'd assumed the same, tbh.

 

[beorhthelm]

it is criminal, or not quite right. maybe the term of the higher payment is for a shorter period, its 6mths of the regular payment.

 

[Arthur]

I'd assumed the same, tbh.

I did as well but no. Term stays the same you just pay more per month. A bit like the season ticket holiday the club are offering.

 

[hans kraay fan club]

I did as well but no. Term stays the same you just pay more per month. A bit like the season ticket holiday the club are offering.

We all stand corrected then!

With the club and the STs I kind of understand it, because they are budgeting over a very defined period - the money does really all need to be collected before the final games of the season you are paying for.

This isn't really the same. Surely they COULD offer a genuine 3 month pause to payments, and just push the term back 3 months, at very little cost to them?

 

[hans kraay fan club]

Obviously the figures are only as stark as they appear, in the OP's case, because he's so close to the end of the term. If you had 20 years to go, you might be looking at a tenner or something, and the 'holiday' could work well for you.

 

[Springal]

Saw some suggestion on Twitter earlier that Barclays 'mortgage holiday' will actually adversely affect peoples credit ratings.

Like all these things, I'd advise only taking them if you absolutely have to.

 

[spongy]

Cant see my landlord giving me a rent holiday then

He has a buy to let so I imagine the costs will be even higher.

 

[Tim Over Whelmed]

It's me again moaning about finance.
I've been offered a mortgage holiday by Natwest but the cost of it is astronomical.
Basics. 2y 4m left of mortgage.
Paying £1480.31 month.
If I take a three month holiday the new monthly cost is £1724.45. An increase of £244.14 a month or a cost of £6103.50 over two years one month.
Put another way.
I'm not paying £4440.93 (3 x £1480.31). The cost of paying back £4440.93 over two years and one month is £6103.50 now take one from the other leaves £1662.57 interest on a £4440.93 loan payable over 2 years 1 month.

That's criminal.

That's profiteering ba****ds

 

[Driver8]

That's profiteering ba****ds

Read his next post!

 

[Bold Seagull]

It's me again moaning about finance.
I've been offered a mortgage holiday by Natwest but the cost of it is astronomical.
Basics. 2y 4m left of mortgage.
Paying £1480.31 month.
If I take a three month holiday the new monthly cost is £1724.45. An increase of £244.14 a month or a cost of £6103.50 over two years one month.
Put another way.
I'm not paying £4440.93 (3 x £1480.31). The cost of paying back £4440.93 over two years and one month is £6103.50 now take one from the other leaves £1662.57 interest on a £4440.93 loan payable over 2 years 1 month.

That's criminal.

The trouble is with the way cumbersome repayment mortgages work is that you're accruing interest on the full amount owed over the 3 months, with each month of interest added to the capital left to pay at the end. So while it may seem like you're borrowing 3 x £1480.31 for a short while, you're not, you are borrowing the interest that say £35k or whatever is left, accrues for 3 months in interest that is added back onto the sum.

You might be better off asking them what you could pay each month that covers the interest the capital amount is accruing i.e. turn your mortgage into an Interest Only Mortgage for 3 months. That way the sum you owe shouldn't change, as you will be covering the interest on that sum (which shouldn't be very much toward the end of a mortgage), therefore all that would then need covering is the capital sum that didn't get paid off for the 3 months.

 

[Arthur]

Saw some suggestion on Twitter earlier that Barclays 'mortgage holiday' will actually adversely affect peoples credit ratings.

Like all these things, I'd advise only taking them if you absolutely have to.

I have my mortgage with Barclays and I don't think that is the case.....

From https://www.barclays.co.uk/coronavirus/mortgages/

Does a repayment holiday affect my credit file?

No – arranging a repayment holiday won’t harm your credit file. It’s really important, though, to contact us as soon as possible if you need a repayment holiday, especially if you’re worried that you might not be able to make your next mortgage payment.

 

[Springal]

I have my mortgage with Barclays and I don't think that is the case.....

From https://www.barclays.co.uk/coronavirus/mortgages/

Does a repayment holiday affect my credit file?

No – arranging a repayment holiday won’t harm your credit file. It’s really important, though, to contact us as soon as possible if you need a repayment holiday, especially if you’re worried that you might not be able to make your next mortgage payment.

Yes your right. The tweet I saw has now been clarified to say that moving to interest only or not making the agreed payment would harm your credit file.

 

[Stat Brother]

WOW, I no longer have a mortgage so am not up to speed on what the deal is, but I just assumed it would be 3 months holiday and then three months added to the current mortgage end date

Maybe I’m being naive here

Yep that's what I got from Nationwide.

Made all the sweeter by the fact I'm a 'key worker' so still earning.

 

[Bold Seagull]

Cant see my landlord giving me a rent holiday then

He has a buy to let so I imagine the costs will be even higher.

Buy-to-lets are generally interest only as the landland does not need the property as their residence, so you don't normally have a repayment with a buy-to-let.

So a mortgage holiday for a buy-to-let who is paying off the interest only per month and not touching the capital, should just be extending the period of the mortgage which will go on 3 months longer paying the interest (which if a fixed product will be the same).

If the rent is therefore more than covering the mortgage, there shouldn't really be any cost to the landland for doing this, so should be able to pass on that 3 month holiday to their tenant.

In these touch unprecedented unpredictable times, I doubt there are too many landlords out there wanting their properties going empty right now. Of course some are absolute ********s, but I suspect many will take a pragmatic view of keeping a good tenant in and making if easy for them to do so.

Definitely worth chatting to them about it. I've heard of quite a few cases of landlords actually contacting tenants and offering them this option, or discussing their situation to ensure a good tenant is retained.

 

[Jam The Man]

We looked into this last night online. It calculated as us having to pay an extra £130 a month upon resumption in 3 months time, which didn’t make sense.
So we called them today and it works out actually as £15 extra a month. Evidently their online calculator was screwy.