mortgage payment holidays

dipsy

Hi does anyone know anything about taking a mortgage payment holiday

i.e. does it affect your credit rating?, what are the normal criteria for acceptance and does it change your payments once the payment holiday is over?

thank in advance.

Senior_Paper_Monitor

Recently looked at this in some detail for a client.

A little difficult to get a specific answer (and you should always ask the lender concerned how they will process it in terms of their reporting - go to their helpdesk, not the branch, and do not be fobbed off by an easy answer - you want to know exactly what they report the change as) but the general indication is that it can, and probably will, adversely affect your credit rating.

Yes it will increase your future payments if you take a payment holiday. Help desk should provide you an exact caclulation.

Criteria for qualifying for loan vary with lender - credit checks will probably be made before approval.

If it is a genuine short term cashflow problem, a responsibly structured short/medium term loan can often be the better solution.

beecher2

Think of it as authorised arrears rather than a 'holiday' and use only as a very last resort - cutting back on expenditure is always the better option.

Lilacblue

Hi there

We took a three month mortgage holiday, and it did not affect our credit rating in any way. As a previous poster has pointed out, it is obviously crucial to talk to your lender about what can be offered by them. And if youn need it because your general spending is too high then there's an underlying problem you need to sort out of course.

It was extremely helpful for us, as at the time we had a huge amount of extra cash to find as we were funding a property development.

The lender were helpful - it was the Coventry Building Society.

Best of luck.

Dan_1976

One of the brokers in my old practise had to take a client sub prime because of his payment holidays. I am not sure who the lender was, it may have been woolwish.

I had the same with a client who a flexi mortgage. He paid 4-5 times a year, such big payments that the first one got him through about 6 months, but he had to go sub prime when he moved.

Tuscan

we took one a few years ago when we had a baby, we are with the Nationwide and can take 2 holidays for up to a year each as part of the standard terms of the mortgage. with us it would mean the payment would go up after the holiday so the loan would be for the same period (25 yrs).

for us it worked well, we took the break for the whole year as we were both self employed so my wife had almost no income when she stopped work, the mortgage break enabled us to put money away and to not have any major money worries in our baby's first year, most months we still put the mortgage money and more away anyway, so had some decent savings behind us which was just as well because the next year (this year) the crunch hit and ive only had about 50 percent of my normal work load.

it didnt effect our credit rating and as our fixed rate finished and the interest rates dropped so low, at the end of the holiday our new payment was even less than it was before the break:T

one thing i would add, is at the time we were 8yrs in to the mortgage and only owed about £80,000 and the house was worth around £230,000..

suzib1981

Im considering asking the rbs if we can take a repayment holiday as im due to start maternity leave next month and my husband was told a week ago that all staff where he works have to take a 10% pay cut for the forseeable future. Just wondered how long it takes to set up with your lender do you have to let them know a few months in advance???

Tuscan

think it was about a months notice..

moneysavermum_2

dipsy wrote: »

Hi does anyone know anything about taking a mortgage payment holiday

i.e. does it affect your credit rating?, what are the normal criteria for acceptance and does it change your payments once the payment holiday is over?

thank in advance.

Dont use unless you have to as the interest stil goes on but your payments stop. Therefore your mortgage balance goes up by the interest over the year.:eek:

Squish_21

I'd use a payment holiday as a very last resort. However; it shouldnt affect your credit rating.

Have you considered interest-only?