How Does Skipping a Mortgage Payment Work?
Many lenders provide the option for you to skip a mortgage payment each year to help alleviate those tight financial months where everything seems to come due at once. But this also may be an option to help you push your cashflow just a bit further while coping with income loss during COVID-19.
If you decide to skip a mortgage payment – provided, of course, that your particular lender offers this option – it’s important to note that you’ll still be responsible for paying your usual insurance premiums and property tax installments, if applicable.
While 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, the payment you skipped plus interest will be added to your mortgage balance. This means that, when your mortgage is up for renewal, your monthly payment amount increases based on your higher outstanding mortgage balance.
If your lender offers skip a payment, in order to take advantage, you must also ensure:
- Your mortgage is not in arrears
- Your current mortgage balance, together with the amount of the payment(s) you wish to skip, does not exceed the original amount of your mortgage
Does skipping a payment make good financial sense?
Unless skipping a mortgage payment is your last option, it’s not recommended that you take this approach because you’ll end up paying more interest.
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 decided to pay it back.
Paying your mortgage regularly is going to benefit you the most over time. It’s always important to read the fine print and ask questions when using a product or savings tool offered by your lender. Banks only offer programs that will benefit them long term.
Have questions about skipping a mortgage payment or mortgage deferrals? Answers are a call or email away!