Is it Worth Freezing Mortgage Repayments?

There are some lenders that will allow you to freeze mortgage repayments at times. This could be because of the fact that you have a flexible mortgage or it could be because lenders are in an unusual situation where they have been told they have to allow it if required. Some will also allow it if you ask, even without a flexible mortgage if you explain that you need some help. There are advantages and disadvantages to doing this and it is worth thinking it all through before deciding whether it is something that is worth doing for you.

Help You Out of Financial Difficulties

If you are having financial problems then you may feel that having your mortgage payments frozen could be very helpful. Often our mortgage can be a big proportion of our monthly outgoings and so knowing that we will not have to pay it will be a big help. It can make money available for other essentials such as food, utilities and other loan repayments. It can also help to reduce our stress, knowing that we will have that extra money available to spend on things that we need. It is something that could make a really significant difference to your financial situation and ability to cope with paying for essentials. However, there are disadvantages as well and it is worth understanding what these are before you make up your mind.

Costs More in the Future

It is worth remembering that you will still have to pay back the mortgage and so if the lender does not extend the term, you will face higher repayments in the future. This could be manageable for you but it can be hard to know if you still have a lot of payments left as you cannot predict how your future finances will be. Your lender may extend the term of your mortgage, so that you get longer to repay it – so if you stoop repaying for 3 months, then you get three months longer to repay at the end. However, some may not do this and will increase your repayments once you have it unfrozen. It is really important to find out what they intend to do so that you can calculate if it is something that you will be able to afford.

Appears on Credit Report

It is also worth noting that it will appear on your credit report. The credit report is used by lenders to see whether they can trust you to lend you money. If they see that you have had repayments frozen, then they may be more likely to fear that you will not be able to repay a loan in the future and turn you down when you apply. Even when you are looking to rent, change utility supplier, take out insurance or for some jobs your credit record will be looked at, so it is really important to consider whether it is wise to allow it to have something like this appear on it.

A mortgage payment freeze can be extremely helpful in some circumstances. However, it is a good idea to make sure that you really need it because there is the chance that it might cause problems in the future. So, think it through and see it as an emergency plan and make sure that you only use it if you know that you will not otherwise be able to pay for all of the necessities that you need. Think carefully about whether the impact on your credit score and the implications for having to make larger repayments in the future will be a problem for you as well, before you fully make up your mind.

Give a Comment