Friday 24th May 2024

A mortgage holiday sounds great, but it’s not all blue skies and beaches

Mortgage Holiday

My first year of parenthood brought with it a fair amount of financial stress. We weren’t poor or bankrupt, but we needed to tighten our purse strings, and so paid very close attention to what we spent our money on. If we could, we would buy things second hand, and looked out for offers and deals in supermarkets that could help us save a few pounds each week. This was easy to get in to the habit of once we realised how much money we wasted each month on frivolous and unnecessary things (like Greg Lansdowne did!).

The extras were easy to curb but we still wondered if we could save a bit more and, when I entered the period of maternity where I wasn’t paid anything, we looked to see if there was anything more we could do. Bills and policies were in place for a reason, so there was no way of losing them or putting them on hold – though we shopped around at insurance renewals which saved a fair amount.

The only other thing we thought we could drop for a bit was our mortgage. Our financial adviser had once mentioned in a discussion about mortgages that there was such thing as a mortgage holiday. Which all sounds quite luxurious for the mortgage (I could do with that holiday myself!), but in fact it allows the home owner to postpone or reduce their mortgage payment for a set amount of time. Some money can then be saved and you can get back to normal at a later date. That time away then gets added on to the end of the mortgage period, so still eventually gets paid.

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I was surprised to find our adviser’s response wasn’t to jump straight in and help us sort it out.

Now we aren’t talking years here. We weren’t looking to pull a fast one on our mortgage provider (who have been brilliant so far), but a few months grace could just give us the cushion we needed and help build our savings back up to what they were. So, we emailed our adviser to get her thoughts on it.

I was surprised to find her response was not to jump straight in and help us sort it out. Instead she replied with some questioning as to whether we really needed to do it. Yes, it would free up money for a few months, but did we really need it? Could we currently still afford to pay our mortgage and would those savings be of any actual use straight away?

And I am really glad she did question us on it because to this day one line sticks with me from that email conversation:

“If you can afford to be paying your mortgage, then keep paying it.”

When we really talked it through we realised she was right. The money in savings would be wonderful and would allow us to feel supported by our own finances, but we would build back up to that over the next year anyway, and if there was no rush for that money then we didn’t really need to take the holiday at all.

If we can ride this wave successfully then we can go forward financially better off.

So, we kept paying it. We kept looking for the deals and savings in our monthly outgoings and she was right – over time we slowly built our finances back up. Our savings aren’t quite what they were and some months do feel quite tight but likewise, we haven’t added that extra time on the end of our mortgage.

Maternity worries about money will last for a few more years, but in the end the sacrifices are worth it. If we can ride this wave successfully then we can go forward financially better off.

Jenny Taft

Part time secondary physics teacher, mother of one (soon to be two), and my financial hurdles are mostly parental based.

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