Skipping a mortgage payment? Good or Bad?

[Millions]

Hey Everyone,

I just got a mortgage through scotiabank and noticed that you can double up a payment and skip a payment. Im thinking you can do this once a year.

Since I dont intend on keeping the property for 35 years until its paid off, do you recommend once in awhile (maybe once a year or 2) Skipping a payment and banking the cash for that month? certainly improves cashflow!

Now the downfall is im thinking that this probably adds more than one month to the mortgage? I have heard maybe 3 months due to interest but i dont know forsure.

What does everyone think?

Matt

 

[MonteDobson]

QUOTE (Millions @ Oct 5 2009, 10:07 PM) Hey Everyone,

I just got a mortgage through scotiabank and noticed that you can double up a payment and skip a payment. Im thinking you can do this once a year.

Since I dont intend on keeping the property for 35 years until its paid off, do you recommend once in awhile (maybe once a year or 2) Skipping a payment and banking the cash for that month? certainly improves cashflow!

Now the downfall is im thinking that this probably adds more than one month to the mortgage? I have heard maybe 3 months due to interest but i dont know forsure.

What does everyone think?

Matt
We have this option on a number of our mortgage as well. It most certainly helps the cashflow situation.

We used it in mainly in year 1 to help build up cash reserves more quickly, bit since then have opted to not skip any payments and continue paying down the mortgage, therefore increasing the equity in the property. My opinion is to save it until you may NEED it, such as an unforeseen vacancy or repairs.

 

[RobMacdonald]

Scotiabank`s policy is a little different than others. You have to match a payment before you can skip a payment. And you have the option of matching each and every payment if you like.

Since the interest on the rental property is tax deductible, you would be better off paying additional funds on any other non-tax deductible debt that you have.

 

[Nir]

My logic is if you want to buy more RE, don`t delay - buy as soon as you can! (makes sense, right) Now, in order to buy as soon as you can, pay your current mortgages as slow as you can. Hope this helps. For some reason people struggle with this simple concept. Good luck.