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  • Mortgage help plz, overpayments and holidays.
  • junglistjut
    Free Member

    Me and the GF have a modest mortgage on a 2 bed bungalow. I’ve been making little over payments that amount to almost 2 months of regular mortgage payment.

    If I miss the next payment, will it automatically be taken from my over payment? Or is this something that I would have to contact the bank to explain ?

    I’m asking because I have been furloughed from work and would like to take a mortgage holiday but would prefer to use the overpayments first.

    80 percent wages would not be a problem under normal circumstances because my toy money will cover my half of the mortgage. GF is pregnant though, so toy money would be better spent on baby stuff.

    andylc
    Free Member

    Your overpayment will take money off your total capital outstanding, and you can’t put money back on without speaking to your bank, which is essentially what a payment holiday is. I’m sure it won’t be a problem given the current situation but it won’t happen automatically.

    martinhutch
    Full Member

    You’ll have to speak to your lender anyhow, especially if you are wanting a payment holiday. If you can manage to continue your payments on 80% income then you should do that, though, as interest will continue to accrue on your mortgage balance throughout a payment holiday period.

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    P-Jay
    Free Member

    I think it varies from Bank to Bank.

    When we took out our mortgage a few months ago they said that over-payments could be took as holidays down the road, we decided to use it as a good way to save for holidays etc as you got a bit of an interest break from it.

    As with all things financial speak to the bank first! Don’t just bounce the DD or cancel it, alarm bells will ring loud and clear if you do.

    5lab
    Full Member

    as above, speak to your bank. With our current lender (santander) – if I make the payment to reduce the term of the mortgage, I can’t get the money back, but if I make the payment to reduce the future payments on the mortgage, I can.

    junglistjut
    Free Member

    Thanks for the info. I’ll get the GF to dig out the paperwork so I can study it.

    dannybgoode
    Full Member

    Never miss a mortgage payment without speaking to the lender first!

    StuF
    Full Member

    I think several of the banks are offering a 3 month payment holiday at the moment. This just means that future repayments will slightly more than what you pay now. This is applicable even if you’ve not overpaid.

    jekkyl
    Full Member

    It is likely that your overpayments have put you in a forward position with your payments. I work for a bank in the mtg department so speak from experience but your bank may vary. Just give them a ring. The payment holidays are being dished out to anyone who calls in and says they’ve been affected by the virus fallout, no evidence needed. The payments you miss go on the balance so your payments will go up after.

    P-Jay
    Free Member

    I think several of the banks are offering a 3 month payment holiday at the moment. This just means that future repayments will slightly more than what you pay now. This is applicable even if you’ve not overpaid.

    It *should* be all of them. Behind the scenes the Gov spoke to them all via the FSA (probably) saying “Remember 2007? Yeah, so do we, everyone gets a 3 month Holiday no-questions-asked but Interest continues to accrue”.

    A lot of my friends have done it as a matter of course, they’d rather have 3 month mortgage payments in the bank if things go wrong, frankly a lot of them are 15 years or more into their mortgage with tonnes of equity and just fancy a nice holiday after all this is over.

    Things are different for us, we’re 4 months into buying our first home. Our mortgage is an eye-watering £1100 a month so £3300 ‘saved’ over 3 months is very appealing at the moment, but we only bought our place in December with a 5% deposit. We will have paid off about another 5% by the time our 2-year mortgage deals ends. We also bought a ‘needs modernising’ probate sale, we’ve got a brand new kitchen and bathroom and if/when they ever reopen new carpets throughout and decorated etc. If we get what we paid in, we’ll have increased it by 5% of the original value – the plan was with a bit of an increase in value that we’d safely get into 85% LTV by the the time the 2 years is up to get that 1.5% rate which would save us £250 a month or reduce the term by 7 years.

    Now, I’m more concerned with staying out of the default bend-over rate, if values fall as much as they did in 2007 it’ll wipe out all our equity, including our deposit and we’ll struggle to remortgage at all. Owing an extra £3k really won’t help, so things will have to get very bad before I take a holiday.

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