Are you having money issues? Well, you are not alone. Financial problem is something that affects everyone from time to time. When money is tight, and your mortgage is due, you might have heard this advice many times — " Take up a mortgage payment holiday" But before you do that, get this: taking a break from your mortgage repayment is not always the best idea. In this post, you will uncover all you need to know about mortgage payment holidays.
What is a Mortgage Payment Holiday?
A mortgage payment holiday is an agreement a person may reach with his/her lender permitting them to reduce or halt their monthly mortgage repayments for a specific period. The duration of this break can range from one month, six months or even a year. However, the length of the breaks depends on a person's financial situations and the terms laid out by the lender.
Who is eligible for a Mortgage Payment Holiday?
Most of the times, Mortgage payment holidays are offered by lenders when:
- If a person has accumulated a generous amount of credit via mortgage over-payments.
- If unforeseen expenses prevent a person from making repayments.
- If there is a change in the financial circumstance of a person.
When nursing the thought of taking a payment holiday, always remember you will need a decent history of your repayments, most times with no back payment due during the previous year of your mortgage.
The Good Side of a Mortgage Payment Holiday
It temporarily takes some pressure off your monthly expenditure until you get a new source of income.It is the best way to find your feet again instead of choosing to go into mortgage arrears.
The Bad Side of a Mortgage Payment Holiday
Even though you are not making mortgage payments, your remaining mortgage balance is still piling up interest.After the holiday payments, your mortgage repayments will be higher than they were before you took the payment holiday.Since it will affect your credit file, you might find it challenging to get credit.
A break from your payment might be a prudent choice if the only option is going into arrears. But don't forget the "bad side." If something confuses you about how to you will make a payment, then you will need to speak to your lender.
Lenore has been a Collier County resident for over 40 years. She fell in love with Naples and surrounding areas and decided to make the move from Cleveland in December 1981. Lenore has a Bachelor of Arts Degree from the University of South Florida where she met her husband of over 25 years. They have two children that attend University of Florida and Florida Gulf Coast University. She has worked as a Community Service Deputy with the Collier County Sheriff’s Office, a Guest Teacher with the Collier County Public Schools, and continues to serve on many committees with the Parent-Teacher Organizations in Naples. Lenore has a true passion for Naples and is excited to put that passion to work for her customers. Whether you need an expert guide in buying a home, or a dedicated leader to sell your property; her love of Naples will always give you piece of mind in your real estate venture.