Most people make overpayments in order
to pay off their mortgage early –
but there is another possible reason.
Many modern mortgages allow you to take
"payment holidays" –
periods when you can temporarily stop making your normal
monthly payments – perhaps if you are taking a
period of unpaid leave from your job, for example.
Overpaying before taking a payment holiday
can enable you to stop your payments for a while without
falling behind on your mortgage's repayment schedule
at all – for example:
Overpay three months' payments
Take a three month payment holiday
Result – your overall payments remain
on schedule
Obviously the details of such an arrangement
vary from mortgage to mortgage, but it is useful to remember
the possibility and ask your broker or lender about it when
choosing a new mortgage.
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