Mortgage Vacations – Are they a Good Idea?


Is taking a small vacation from your mortgage a good idea? With all the advertisements promoting this idea recently, we examine the pros and cons so you can see the potential benefits and potential downfalls.

The definition of a mortgage vacation is skipping a payment, for whatever reason (not really important). In order to qualify for a mortgage vacation, you must first pre-pay the vacation (make extra payments on top of your regular payment) so that you can apply those payments when you want to take your mortgage “vacation”. The benefit is obvious – you can put the cash you would have paid to your mortgage for that “vacation” directly back into your jeans. You could use this money for whatever you choose including an actual vacation, investing in other opportunities or purchasing an asset.

The negative of skipping a mortgage payment is quite simple. Banks are not in business to lose money and so they ensure that your account continues to accrue interest. They won’t reduce your amortization period, so in some cases your payments may even go up to make up for the interest that has not been paid off.

We suggest skipping this idea altogether and instead of pre-paying mortgage payments for a later date, consider investing in savings accounts and pull the money when needed.

If you have additional queries about your mortgage, please contact us at Higgelke Mortgage Group.