Effect of Interest Only for short period

[ddmani]

I have engaged with bank in the case that I have difficulty repaying my mortgage as I am currently unemployed. They have offered me a 3 month moratorium followed by 3 months interest only. What is the net effect of this on my mortgage? How do I calculate how much more I will have to repay when I return to full repayments?

 

[Gerry Canning]

Because rates are low the real net effect is the adding 6 months longer onto your mortgage,
If you (I hope you do) get good gainful re-employment , they might just add the six months onto your remaining term .
Example . if you should be paying 1,000 per month for 6 months = shortfall = 6000. and you have 240 months left , divide 6000 by 240 = 25 oer month more .
So when back on your feet mortgage payments increase from 1000 to about 1025 per month.

 

[Monbretia]

Bank should be able to calculate for you what your payments will be on the increased balance and confirm whether or not they will extend the term by the 6 months or just increase repayments to cover shortfall.