mortgage payment holiday

iluvpink1

I would appreciate any views on this!!
Halifax refused us additional borrowing on our mortgage due to a poor credit score and despite the fact we have never missed a mortgage payment in 18 years an have high LTV!! Anyway they have suggested we take 6 months payment holiday as this will free up the £3000 we need to pay off exisiting debt. Just wondered if anyone else has done this...it sounds tempting. Our advisor is working on figures but doesnt think the payments after the 6 months would be hugely affected.

themull1

I've done that before.

Thrugelmir

By taking a payment holiday your mortgage will be marked as in arrears on your credit file. So a more severe impact than being allowed additional borrowing.

kingstreet

Unless you've overpaid six months payments previously, I agree with Thrugelmir. You're putting yourself into arrears, with all that entails for your long-term creditworthiness.

opinions4u

The way Halifax used to do payment holidays was to change the contractual payment to £0 for the period.

This certainly didn't impact on credit files which simply showed the full contractual payment being made. RBS certainly didn't operate this was and showed them as authorised arrears.

So while it's certainly a way of borrowing the funds you want, the key questions are:

1) How will it be recorded on my credit file? (get it in writing - I think you'll be fine with Halifax, but things may have changed so make sure!).
2) What will may payment rise to after the 6 months?
3) What rate of interest will the additional borrowing be charged at? (typically 3.5%).

kingstreet

opinions4u wrote: »

The way Halifax used to do payment holidays was to change the contractual payment to £0 for the period.

This certainly didn't impact on credit files which simply showed the full contractual payment being made. RBS certainly didn't operate this was and showed them as authorised arrears.

So while it's certainly a way of borrowing the funds you want, the key questions are:

1) How will it be recorded on my credit file? (get it in writing - I think you'll be fine with Halifax, but things may have changed so make sure!).
2) What will may payment rise to after the 6 months?
3) What rate of interest will the additional borrowing be charged at? (typically 3.5%).

It may depend on the borrower. Last time I rang them (Halifax) to discuss this for a client, last year, they practically told me to get lost on the phone.

welshnoonoo

Surely if the Halifax sell you a mortgage which as the option to take a 6 month payment holiday as part of the sales pitch they couldn't then mark you as being in arrears on your credit file? That sounds ludicrous to me. Maybe if a mortgagee didn't have a product that had this as one of the benefits but was applying for a 6 month mortgage holiday then yes I'd understand that.

I am considering asking the Halifax for a 6 month payment holiday because I was made redundant in January and am now starting up in a new business and could do with this time to lower my outgoings while I am building the business. The business has already got over £9k worth of orders on the books which have been taken since January but I am just not sure that they would consider this a viable reason to have a payment holiday.

The mortgage product that we took was sold to us with this 6 month payment holiday as a benefit.

opinions4u

welshnoonoo wrote: »

Surely if the Halifax sell you a mortgage which as the option to take a 6 month payment holiday as part of the sales pitch they couldn't then mark you as being in arrears on your credit file? That sounds ludicrous to me. Maybe if a mortgagee didn't have a product that had this as one of the benefits but was applying for a 6 month mortgage holiday then yes I'd understand that.

I am considering asking the Halifax for a 6 month payment holiday because I was made redundant in January and am now starting up in a new business and could do with this time to lower my outgoings while I am building the business. The business has already got over £9k worth of orders on the books which have been taken since January but I am just not sure that they would consider this a viable reason to have a payment holiday.

The mortgage product that we took was sold to us with this 6 month payment holiday as a benefit.

subject to approval. It won't be approved to fund a new business.

DVardysShadow

opinions4u wrote: »

subject to approval. It won't be approved to fund a new business.

But tide you over while looking for work after redundancy?

xyellowx

halifax would advise you to take a payment holiday
so they can get there grubby little hands on the fee they will charge you

Thrugelmir

welshnoonoo wrote: »

Surely if the Halifax sell you a mortgage which as the option to take a 6 month payment holiday as part of the sales pitch they couldn't then mark you as being in arrears on your credit file? That sounds ludicrous to me. Maybe if a mortgagee didn't have a product that had this as one of the benefits but was applying for a 6 month mortgage holiday then yes I'd understand that.

Mortgages aren't sold on the basis of payment holidays. At a guess you opted for your current mortgage on the basis of the interest rate at the time.

The purpose of marking arrears on your credit file, at the very least on the shared lenders database. Is to highlight the fact you have taken a holiday. In the eventuality that you attempt to do a similar exercise elsewhere.