COVID loan break advice

James2201

Hi I was wandering for some advice if possible. I have a loan with natwest which due to covid I have had on a 3 month break. My wife was made redundant so I have the option to extend it by 3 months. This would make our lives easier while she gets into employment and regular full time pay again. I have resumed paying my mortgage but I am concerned as to how much it would impact me in future if I took another 3 month break. I know they say it won't impact my score but my understanding is it can still impact in other ways. Can anyone with any experience please advise

Takmon

James2201 said:

Hi I was wandering for some advice if possible. I have a loan with natwest which due to covid I have had on a 3 month break. My wife was made redundant so I have the option to extend it by 3 months. This would make our lives easier while she gets into employment and regular full time pay again. I have resumed paying my mortgage but I am concerned as to how much it would impact me in future if I took another 3 month break. I know they say it won't impact my score but my understanding is it can still impact in other ways. Can anyone with any experience please advise

It may not impact your score but that is irrelevant anyway and no lender uses the credit scores that you see from the various websites and Credit Reference Agencies.

Anytime you apply for credit in the future all lenders will be able to clearly see you have taken a payment break on a loan and mortgage because the balance will have stayed the same over that period. So that is already a negative to lenders and you should try and avoid another break if you can afford to repay the loan normally because all it does is add extra interest and make you even less likely to get credit in the future. 

MEM62

As scores are neither seen or used by lenders an impact is irrelevant. 
Whilst I believe that there is no negative reporting in respect of payment holidays, the missing payment will be visible on your credit history.  Therefore, a future lender might conclude that your finances were not robust enough to cope with short term interruption to your income and this will be taken into account in making lending decisions.  

James2201

Ok thank you for your advice, i will see what I can do. Just things very tight at the moment. Regards credit i don't intend to take anymore credit out for the foreseeable future. The only thing I can think of is my fixed rate mortgage is up next year. Will this impact the liklihood of being able to renew that? 

[Deleted User]

It depends on the lender and the overall state of your credit file.

In itself, it may not cause too much concern. But if you're also carrying significant debt at the time, or your affordability is tight, they may feel you're too stretched and have no buffer.

MinuteNoodles

James2201 said:

Ok thank you for your advice, i will see what I can do. Just things very tight at the moment. Regards credit i don't intend to take anymore credit out for the foreseeable future. The only thing I can think of is my fixed rate mortgage is up next year. Will this impact the liklihood of being able to renew that? 

Renewing with your current lender should be no problem, literally a case of ringing up, asking for a new deal and saying yes you can afford the repayments. Your current lender is required to do nothing more than ask if you can afford the new repayments, they don't have to do a full application and affordability test as remortgaging to a new lender would involve.

In regards to the break, if money is tight then take it. There's no point being skint and unable to meet your basic bills such as food, heat and light, roof over your head because you're worried about being able to borrow money at some unknown point in the future which may never even happen.

MovingForwards

James2201 said:

Ok thank you for your advice, i will see what I can do. Just things very tight at the moment. Regards credit i don't intend to take anymore credit out for the foreseeable future. The only thing I can think of is my fixed rate mortgage is up next year. Will this impact the liklihood of being able to renew that? 

Depends on the lender.

Most lenders allow you to pick your new fixed rate online by simply looking and clicking to opt for that one.

Some lenders you have to call to fix a new rate, therefore they have set questions before the new fix is arranged. Who knows if they will incorporate something to do with Covid / holidays etc.

See what options are available with all your other bills, drop down / stop packages, cut food shopping etc to see if that frees up enough to cover the mortgage or some of it, then make a decision.