Rebecca Stevenson

IT’S the holiday of last resort. Auckland socialite Sally Ridge testified in a recent court case that she had to take one when former husband Adam Parore turned off a funding tap.

But, as Massey University’s banking expert Dr David Tripe says, it’s the holiday that’s not a holiday at all; it’s just a deferral of payment.

In essence, a mortgage holiday allows a mortgagee to take a break from paying regular instalments for a short window of about three months.

A BREAK THAT WILL COST YOU

A mortgage holiday is a ‘‘get out of your mortgage payments’’ card rarely played.

The big banks reckon only a minor portion of their residential lending portfolio is on holiday.

Financial adviser Liz Koh says banks don’t promote them widely – they don’t want a lot of people on holiday – and public awareness of holidays is low.

Kiwis owe about $180 billion in mortgages, the Reserve Bank of New Zealand says.

The largest lenders on Kiwi homes are the Aussie-owned banks ANZ, BNZ, Westpac and ASB. Local lender Kiwibank has captured a chunk of the homelending market too.

ANZ’s mortgage book is the biggest, worth more than $55b, according to its latest disclosure statement.

Mortgage holidays account for less than 1 per cent of ANZ’s home loans, a spokesperson for the bank says. ANZ home-loan repayment holidays are available ‘‘at the bank’s discretion’’.

They can be taken after the loan has been in place for at least two years, for a maximum of three months. ANZ customers can have one holiday every two years – if approved.

As Tripe points out, you may defer the payments but interest keeps compounding and is added on to your mortgage. The cost