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What to consider before taking a mortgage holiday



The term ‘mortgage holiday’ could sound quite appealing these days, with borrowers facing increased interest rates and higher repayments. However the decision to hit pause on your mortgage repayments shouldn’t be taken lightly.


A mortgage holiday is designed to allow you to temporarily pause your mortgage repayments for a determined amount of time. It’s designed for those facing financial hardship from circumstances like an unexpected illness, accident, or the loss of a job, and it is great in the fact that it allows borrowers to get back on their feet without the stress of meeting their repayments.

It is important to keep in mind that a mortgage holiday is temporary short-term relief and should only be used when absolutely necessary. Here’s why….


When you hit pause on your mortgage repayments, your interest continues to accrue and add to the overall cost of your loan. This means when you resume making repayments, the amount could be higher to help catch up on the repayments that you missed.

The interest accruing on the loan with no repayment will also mean that you end up paying more over the term of your loan. Depending on how long you take a holiday for, it can also change your repayment terms.

While a mortgage holiday is a good option should you absolutely need it, we’d recommend speaking with a mortgage advisor around some alternative options you could explore to help make repayments a little easier. These could include:

  • Extending your loan term on your mortgage which will reduce your repayments for a short time. It can be then reduced later on once your circumstances change.

  • Making interest only repayments for a while. This ensures you are keeping on top of the interest, which in turn will save you more than a full repayment holiday

  • Asking your mortgage advisor to take a look at consolidating debt and high interest loans into one manageable repayment. This often reduces repayments and allows you to pay off debt faster. Alternatively, we could look at refinancing to a different lender that could suit your new circumstances better.

While a mortgage holiday is a great option, it’s important to get the right advice before you decide to hit pause. If you are struggling to meet your repayments or have had a change in circumstances, then get in touch with our mortgage advisors at Better Choice and we can find a solution that suits you.


Contact our local mortgage brokers today on 0800 005 676 or email rohit@betterchoice.co.nz

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