mortgage holiday - future implications

mikechaos

bradders1983 said:

Grumpy Chap crystalised it much more succinctly than I did above.

I love that username! That should have been mine lol

Would a lender look at the balance from 2-3 years ago if the mortgage is on track with no missed payments logged??

[Deleted User]

In 2 years I doubt it'll be any issue at all to be honest (assuming you have no other issues!). If you applied for a new mortgage next month, it's a different story.

Looking at the balance from years back....A human could, but I doubt they would.

A computer (i.e. lenders credit scoring) could be programmed to do whatever. 3 months of the balance slowly increasing OR "no update" (another option) at/around the time the payment holidays were given out.... and it could deduct X 'points' from the score. Whether that's actually an issue would depend on everything else on the case. Your existing lender will obviously be aware, whether they take any action or not when looking at any new applications is up to them

Marking you as a risk etc. might not be as the FCA intended, but lenders (like insurance companies) have to assess risk. If they deem everyone that took payment holidays during coronavirus to be a risk, then I'm not sure who could tell them to stop it. Particularly if they have any data on subsequent defaults/possessions etc. over the next X years which backs it up.

Agree with blue_max's point - if you need it, then you need it. If it does cause an issue with one lender, you can always go elsewhere.

Bibbitybobbitybop

I've just applied for a new mortgage. Broker told me to no way apply for a holiday on my current mortgage just in case lenders started asking if one had been taken. 

Thrugelmir

2 to 3 years at the current time is a long way off. There's much water to flow under the bridge.  What is behind your question? Might help to expand a little. To provide more constructive responses. 

mikechaos

Thrugelmir said:

2 to 3 years at the current time is a long way off. There's much water to flow under the bridge.  What is behind your question? Might help to expand a little. To provide more constructive responses. 

Hi Thrugelmir

We have taken the payment holiday option as our income has been affected by the current situation. We also have a lot of unsecured debt that we are dealing with due past stupidity. We hope to be back on our feet in a few months and continue with our debt free journey. Our aim is to move house within the next 3 years. We currently have a property valued at 210K with a mortgage balance of 57K so we will have a decent deposit for the next house, if that makes any difference. 

Dandytf

I considered a holiday via Nationwide, their website clearly states No Negative effect on Credit Reporting.
I personally decided against, for time being anyway.

EverythingIWant

They will be hammered in the future if it ever came to light that they declined applications from people who took covid 19 support that was officially mandated. Though the banks like playing with fire so it wouldn’t surprise me. So long as your payments are subsequently and prior up to date I don’t see the problem.

Brock_and_Roll

As a banker I can reassure people that the statement about "no impact on credit rating" is correct. 
Just as with insurance policies however any new lender in the future could ask whatever questions they wish (within the law) - for example "have you ever taken an arranged mortgage holiday?" and they could use that to open up more questions and may have an impact on the decision and/or price.
Of course taking a mortgage holiday is an indicator of financial stress - if you have no debt and a years salary in the bank you are not going to need one. However, time is a great healer in terms of mortgage lending competition and by the time anyone holidaying now needs to switch, any impact will be slight, if any.