Considering a mortgage holiday?   Is this your best option? 

During this time of uncertainty, many people are investigating the option of taking a mortgage holiday.   Before taking this step, we recommend that consideration is given to the other options available to you.

Mortgage Holiday. 

A mortgage holiday is when your mortgage is effectively “put on hold” for a specified period, ie: 3 months.  During this time the interest will accrue  on the loan balance.   If your payments are say, monthly, then the interest for the previous month will be added to the principal and interest will accrue on the new increased amount for the next month.  The overall effect of this is that your principal balance will increase and the term of your mortgage will be longer.

Transfer to Interest only.

Most Banks will give you option of making “interest only” payments for a specified period of time.   This will mean that you will still make your regular payments but they will only be for interest and no principal.  Therefore your principal balance will remain the same during the specified period.  


With the current low interest rates being offered by the major Trading Banks, it is worthwhile considering refinancing your existing mortgage, especially if you can get a significantly lower rate than what you are currently on.   You may therefore be able to continue to meet both principal and interest costs for a much lower regular payment.

If you have been considering any of these options, we would recommend that you approach your Bank and seek their advice as to which option would best suit your own personal circumstances.    Explore all of the options with them and ask for figures for each option so that you can make a fully informed decision.   Please bear in mind that if you do consider the refinance option and you are currently on a fixed term mortgage, there may be break costs involved.