This holiday period however, does not come ‘interest free’ as many are assuming. During the repayment holiday, the lender will still be charging interest and fees to your loan account. However you will not have to make repayments for potentially 3 to 6 months. The video above explains the advantages and disadvantages of taking a holiday repayment.
If you still have the ability to make some repayment amount towards your home loan, it might be worth considering changing your repayments from principal and interest to interest only. Read this blog which explains further.
Before deciding if a repayment holidays is right for you, it’s important to understand it’s circumstances. The money you have saved in your offset accounts or available redraw, may be used by the banks. The banks uses that money to pay interest or fees which would have been payable during the normal loan term. While this does mean that your debt at the end of the holiday period is not as large, the below video explains further.
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