Mortgage Holiday Extension - what will you do this time?

[Julia121]

The papers are reporting that the Mortgage Holiday will be extended, possibly for another six months. When Mortgage Holidays were first announced you could practically cut the comments on PH into two halves; those who didn't need the break but thought it was an opportunity to divert the payments into something nice and, those who understood that a mortgage payment holiday was the last thing a Lender wants to see on your credit file. I fall in the latter camp.

But the game and indeed the field have now changed and it's always worth revisiting the habits and behaviors one's adhered to. I think this time around there may be some opportunities for arbitrage. For example those who have plenty of equity in their properties and intend to buy a property outright with cash from their house sale before the stamp duty exemption disappears in March. Then there are those who can't get a mortgage because of their age, or can't get a large enough deposit to trade up. People who are in stable positions enough to ride out the storm but lenders are not lending to. Wielding the big credit rating stick over borrowers when borrowers know Lenders weren't going to lend them the money anyway may not be the deterrent it used to be.

Yes it will be more difficult for people who've had payment holidays to get credit but it won't be impossible, it isn't forever and Lenders still want to lend you money.

I'd be interested in people's thoughts....

[ChrisNic]

In the process of moving my mortgage at the moment, one of the first questions was whether we had taken a mortgage holiday.

Whilst adding a few thousand to savings might not be a bad move at this stage I can see that these holidays might influence lending decisions moving forward and I don’t want to take that risk.

[Nickyboy]

Julia121 said:

Yes it will be more difficult for people who've had payment holidays to get credit but it won't be impossible, it isn't forever and Lenders still want to lend you money.

I'd be interested in people's thoughts....

Depends if they still keep the stance that nothing will be noted on your file

[Caddyshack]

As a broker we had a mortgage fail the other day, porting a mortgage from one house to another....the reason was the couple had a mortgage holiday, not an outright no but very conservative lending.

[Sarnie]

Nickyboy said:

Depends if they still keep the stance that nothing will be noted on your file

Thats not the issue though.

Lenders now ask if our applicant has taken a payment holiday. They can't tell from your credit file as they don't report it as a missed payment, but a simple request for your bank statement will show if you paid your mortgage or not.

My advice remains the same as first time around.

If you are at serious risk of missing your mortgage payment, take the holiday, thats exactly what it's there for.

If you have the funds, pay your mortgage, you will be better off.

If you take the holiday and then want to lend hundreds of thousands of pounds a month or two later, expect to be scrutinised.......

[Uncle John]

Nickyboy said:

Julia121 said:

Yes it will be more difficult for people who've had payment holidays to get credit but it won't be impossible, it isn't forever and Lenders still want to lend you money.

I'd be interested in people's thoughts....

Depends if they still keep the stance that nothing will be noted on your file

Yes, any formally agreed holiday will not be noted on file.

[Julia121]

Sarnie said:

Nickyboy said:

Depends if they still keep the stance that nothing will be noted on your file

Lenders now ask if our applicant has taken a payment holiday. They can't tell from your credit file as they don't report it as a missed payment, but a simple request for your bank statement will show if you paid your mortgage or not.

Just to add for anyone interested, you can keep your statements showing the same amount going in from your employer if they they have a temporary blip by taking days from next year's holiday entitlement. It's a rob Peter to pay Paul fix but it's enough to satisfy the three previous bank statements requirement if timed well and your employment blip is just badly timed.

[Condi]

Will not be doing so at all.

Am still arguing with Nationwide who have charged me £1500 interest for 3 month payment holiday, when my regular payments are only £440/m on a repayment mortgage. The person on the phone didnt understand that it was impossible for my account to be £1500 bigger after 3 months when the interest for those 3 months only comes to £600 (approx.).


EDIT - the other thing I didn't realise, that despite having an overpayment reserve more than healthy enough for 3 months payment, they didn't draw that down, and instead paused all payments including not taking anything from the reserve. All in all, it was well intentioned but has been a bit of a cluster fk. Maybe my understanding of it was the clusterfk?

Edited by Condi on Monday 2nd November 20:07

[bmwmike]

I wouldn't take a payment holiday unless it was needed tbh. You never know when you might actually need it, plus the extra interest. Also by sounds of it lenders use it as a bit of a red flag.

[jonwm]

My sister took one as she needed too, she has to remortgage next year so will see how it affects them.

Does taking the grants expose you at all for mortgage lending??

Thinking that if you are ticking the seiss box for example that says "I have been affected" and claim 20k over the 4 grants would the lender see that as an increase in risk as you needed to claim or as an increase in your salary so will lend you more on the end of year earnings being higher?

[BoRED S2upid]

Let’s say you could with no adverse affects to credit rating what would you do with the money? 6 months payments a few grand hardly going to change your life is it?

[cossy400]

BoRED S2upid said:

Let’s say you could with no adverse affects to credit rating what would you do with the money? 6 months payments a few grand hardly going to change your life is it?

Suppose it depends how much your mortgage is, my neighbour took the holiday and banked it as he was unsure on job security.

Hes come out still in a job and has banked the money so come renewal time he will have a lump sum to chuck in aswel.

We had a chat at work last week and "most" people have 3 months stashed away, which is wise but this has been been going on for double that now, add in redundancies etc then its going to be a tough christmas period.

[DaveH23]

I'm in the camp that thought taking a mortgage holiday was a stupid idea and it's proving to be correct.

Looking at it from a lenders view point they see you as being unable to afford your repayment if things get tight so see you as a bigger risk.

Wasn't this obvious?

[dingg]

I'm in Portugal, they have a similar system here, apparently lots of new boat buyers have appeared since the introduction of the scheme.

[usn90]

I took the holiday, won’t be doing this time.

Would it not help, if over the next 4 years I repaid the holiday in overpayments, I took out a 5 year fixed rate November last year

Hopefully in 4 years time it’s not something they ask!

[anonymous-user]

DaveH23 said:

I'm in the camp that thought taking a mortgage holiday was a stupid idea and it's proving to be correct.

Looking at it from a lenders view point they see you as being unable to afford your repayment if things get tight so see you as a bigger risk.

Wasn't this obvious?

I thought that was, but it almost seemed like a lot of people just thought it was free money? Unless you really couldn't afford to make the payment I don't understand why you would ask for it? The missed interest just gets added to the total remaining balance so you will pay back more in the long run.

[RowanF]

I, like Sarnie, will be seeing people being asked about mortgage payment holidays and as Sarnie said, it's not marked as a missed payment but your last payment will be recorded as £0 (or a nominal sum if you've agreed to one) and your balance won't be reducing, along with bank statements not showing the normal payment and lenders will be using this to ascertain if they want to lend to a new borrower.

[320d is all you need]

I took a 5 figure paycut so I did take a Mortgage break..

So far though, since the Paycut was temporary at the time I won't be taking a mortgage holiday the second time around.

No shame in taking it if needed.

[Emeye]

I thought you could only take the mortgage holiday if you were on Furlough.

I expect a lot of people are going to have a shock in a few years - this all has to be paid for eventually.

[Sarnie]

320d is all you need said:

No shame in taking it if needed.

Absolutely not.

It's there to help you and is much, much better than missing mortgage payments at what is probably already a really stressful time.

But, I've seen people state that they took it and bought new garden furniture with the money due to the sunny weather we had during the first lockdown......