Mortgage question

Has anyone approached their bank about taking a "mortgage holiday" or switching their mortgage payments to interest only while on maternity leave?

I'm the main breadwinner and I cant see how we will be able to cover our mortgage for the 12 weeks I will be on maternity leave.

Wondering how understanding the banks are or whether we'll need to take out a loan to cover the mortgage payments (and then battle to pay the loan off)

Just ask and find out. It may depend how you have your mortgage set up and different banks will have differing rules

From what I understand, getting a mortgage holiday tends to depend on how long you have been paying your mortgage for (eg, you won't get one if you have only had a mortgage for a year or two) and they're pretty much a no-go if you've ever missed a payment. It would also depend on the size of your loan compared to the value of your house - they're not going to give you any leeway if your mortgage is anywhere near 80% of the value of your house.

If you're on a long term fixed rate it could be difficult to change the way you pay your mortgage, but it would be easier if your loan, or part of your loan is on a floating rate. If you're paying more than the minumum weekly/monthly amount, however, you should be able to cut that back.

The best thing you can really do is have a meeting with your bank - be totally honest with them. 12 weeks off work isn't really that long, and if you can prove that you will be returning after that time and resuming regular payments, that would probably work in your favour. At the end of the day though, banks have to be somewhat understanding. They won't want to lose you as a customer, considering they make a LOT of interest off you over the years it takes to pay off your loan!

If all else fails, are there any other areas where you can cut costs for those 3 months? (stop running a second car, lower internet plan, check you're on the best power plan etc?).

Holding thumbs. (perhaps sent in a budget that you are on currently. And then the budget you have for the 12 weeks)

We had interest only when I was on maternity leave. It is better than a loan holiday as that eats away at your principal.

Best to have a chat with them as also depends on how much you have borrowed etc.

I would try to steer clear of a mortgage holiday if possible. While you're not paying, your mortgage will still incur interest so just ends up getting bigger and bigger. This generally means once you do start paying again your repayments will have to increase.

Here are a few of the rules (at the bank where I manage a team of lenders):
* Only one mortgage holiday per two year period
* Loan can not grow to more than the original amount (which often makes it hard if you've not had it that long)
* Maximum of 3 months

Generally you just have to have a good reason, but any decent lender will try to discourage you from that option if it can be helped. I have seen some loans really balloon because of mortgage holidays.

There could be some other options to consider:

* Interest only (though that will only save you a little bit, especially if your loan is not that old)
* Restructure - ie if your loan is over 25 years now you can restructure it out over 30 years, though there is normally a fee
* Reduce payments to the minimum if not already
* If you have a lot of equity in your home you can often do a top up and borrow to cover expenses while you're off work, though this usually isn't a preferred option.

Good luck! If you want any more info feel free to PM me. Depending on which bank you're with I might know a bit about their lending criteria.