Some months are tighter financially than others, and December is often a likely culprit for cashflow issues due to holiday spending. Many lenders provide the option for you to skip a mortgage payment each year to help alleviate those times where everything seems to come due at once. And this also may be an option to help you push your cashflow just a bit further while coping with income loss during COVID-19.
While considering whether to skip a mortgage payment – once you’ve confirmed your lender even offers this option – it’s important to understand that you’re still responsible for paying your usual insurance premiums and property tax installments, if applicable.
You won’t be charged an upfront fee to skip a mortgage payment and your regular mortgage payments won’t change by taking advantage of this option, but the payment you skipped plus interest will be added to your outstanding mortgage balance. This means that, when your mortgage is up for renewal, your monthly payment amount will increase based on the higher mortgage balance.
In order to skip a mortgage payment, your lender will also require that your mortgage isn’t already in arrears and your current mortgage balance, together with the amount of the payment you wish to skip, must not exceed the original amount of your mortgage.
Should I skip a mortgage payment?
Paying your mortgage regularly will always benefit you the most over time. Skipping a mortgage payment should be used as a last resort, since taking advantage of this option will end up costing you more in interest payments.
While you can repay the skipped payment amount, in order to get back on track to where you were before the skipped payment, be sure to account for the added interest you were charged before you were able to pay it back.
It’s important to read the fine print and ask questions when using a product or savings tool offered by your lender, as they only promote programs that will benefit them long term.
Have questions about skipping a mortgage payment? Answers are a call or email away.