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My wife and I want to take out a Mortgage break for a little while, to try and put some money back in the bank account after decimating our savings last year due to my redundancy. My wifes job is also fragile at the moment (NHS) so we are being very cautious.
We've been in our house for 4 years and have never missed a payment/been late etc. It's in our agreement that we can apply to take a mortgage break depending on circumstances and whether you have been reliable with payments etc. We'd like to duck out of repayments for 3 months and I've booked an appointment with the bank next week to discuss doing this.
I was going to be completely honest and explain the reasons as above but I'm not sure whether that is a justifiable reason for them to allow a mortgage break.
Am I overthinking this? Is it purely a tick the box type thing or will they be very carefully considering my request and therefore should I be re-considering my explanation to them for wanting a break.
I rang up with a view to a similar thing but to clear a chunk of debt. 6 years of payments, not a single missed one etc etc same company and yet still a deline. The lady even warned me before she ran the check that 90%+ get turned down instantly and about 50% of those that dont get turned down later on.
Dont want to p**s on your parade but I would perhaps look at other ways of plumping up the savings just in case.
It's all about the equity - if you have over 30% - give it a go, you have nothing to lose.
If I am correct it's a payment break, the interest keeps accruing. The benefit is you can pay off other higher interest rate debt. If you are doing it so you rebuild savings the argument is less compelling for the bank to agree.
Before you do this would the bank grant you the same loan again ? If you are not working perhaps not. This is definitely difficult ground as they may see this as a potential red flag.
I suspect these payment break clauses were put in place in better times, banks probably regret them now and will use the "decline" mechanism frequently.
You might like to ask Citizens Advice Bureau for their thoughts
not agreat idea on several fronts.. firstly its never been cheaper to repay your mortgage so pay it off as fast as you can.. the interest keeps growing so when you return to payments your payment period will be longer and you ll owe more..
look at it from thier point of view.. you want to stop paying them money you owe them so you can save money to pay someone else.. if you were in thier shoes what would you say..
we did it last year via halifax, 3 month break, think we ended up paying about £6 extra a month for the privilege
As Totalshell has said the interest will continue to accrue and it is more expensive than having an overdraft arrangement if needed or just save the money back up.
They only are willing to do it if your get made redundant or sick for a period, if it's just to save a few quid then they will refuse.
I think they would prefer you to take out some further borrowing against your property (you would have to pay any fees of course).
What's the interest rate on your mortgage and what's the intertest rate on your savings account? I suspect it makes more sense to keep paying the mortgage.
Also, if you can't make savings [i]as well as[/i] paying your mortgage you are sailing extremely close to the wind - how will you cope when interest rates rise?
donald - having savings is nice but it isn't a pre-requisite of having a mortgage.
Your point about interest rates rising means nothing if the OP is on a fixed rate agreement.
We're on a fixed rate for another year. Essentially we've been battered financially for the past 2 years and we are struggling and we will no doubt struggle if/when our mortgage repayments increase come the end of our fixed term.
We aren't able to save at the moment, we are just paying bills. Wife's job isin jeopardy so we aren't in great shape. Regardless, we've never had any issues with our mortgage but a 3 month break would at least allow us to put something in the bank should things go from bad to worse.