Skip-a-payment, the consumer practice of paying off a mortgage loan on the next payment due, is not recommended despite the banking industry’s subtle tolerance of it, says Mortgage Alliance broker Marcel Greaux in a report filed by WhichMortgage.
The convenience of postponing a payment to another date should funds not be available and the absence of a penalty in the event of a delayed payment – these have encouraged the rise of a trend that Greaux, along with other industry experts, have warned as potentially damaging to the mortgage process and its players.
Greaux explains his apprehension: "Any skipped interest is added to the principal balance. This is where it gets dangerous, as the increase costs start to compound and ultimately work in favour of the lender, not the borrower."
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