Golden rules on mortgage holidays

1. Different Name, Same Product - not all banks call them “mortgage holidays” … some call them “parental leave” or “repayment pause options” … but regardless of the name, they are essentially the same in nature
2. Timeframe – banks will generally offer holidays on repayments for a maximum period of 12 months
3. Which customers can apply – most banks stipulate that you must have a loan with them for at least two years and you must not have been late with any previous payment
4. Must be ahead in repayments – to take advantage of this option, you also need to be ahead in your repayment schedule on your loan
5. Repayments required – whilst some banks do not require any repayments at all, some require a reduced payment during a mortgage holiday. Each application is on a case-by-case and bank-by-bank basis
6. Re-draws – banks will not allow for you to re-draw on your loan during the period of your “holiday”
7. Interest – unfortunately getting a holiday on your mortgage doesn’t mean that the bank will freeze the interest as well … it would be nice if they did … your loan will still accrue at the normal interest rate and subject to interest rate rises
8. No extra fees – generally banks don’t charge any extra fees for this option, but there is a chance that additional mortgage insurance may be required
9. Payments on re-commencement – once you return from your mortgage holiday, expect to pay a slightly higher amount as repayments are recalculated for the balance of the loan

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