Glossary - Payment Breaks

Payment Breaks are payments that are stopped for a certain length of time.
These are more commonly known as payment holidays. They are features of certain financial products which allow customers to stop making payments temporarily and for a certain length of time. Payment holidays can help to get over short term financial problems. (See also overpayments and underpayments.)

Example: UK Flexible Rate Mortgage
Allows the customer some flexibility over their repayments. Usually a borrower is allowed to overpay, underpay and can take payment holidays when required. Some flexible mortgages offer daily interest rates so that any overpayment will show any benefits straight away. Underpayments are only usually acceptable once you have made overpayments.

Mortgage Tip
The interest rate on a UK flexible mortgage is usually the same as a standard variable rate mortgage. The interest rate fluctuates according to the Bank of England's base rate which can vary dramatically. Some flexible rate mortgages require an overpayment to be made before an underpayment or payment holiday is accepted.

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