Taking an organised mortgage break with after already taking the 6 month break

pearsforlife

Effectively your on an interest only mortgage currently albeit it temporary. Shouldn’t be a big deal really.

MWT

pearsforlife said:

Effectively your on an interest only mortgage currently albeit it temporary. Shouldn’t be a big deal really.

... except that an 'Arrangement' can be interpreted by lenders as 'unable to meet loan commitments'.

This is one where a full remortgage to take advantage of improved property value would be best done through a broker able to navigate to the right lenders as otherwise the mortgage holidays and the arrangement may be an issue...

Thrugelmir

pearsforlife said:

Effectively your on an interest only mortgage currently albeit it temporary. Shouldn’t be a big deal really.

Any variation of payment terms will suggest financial distress. Something potential lenders will be looking to identify during the underwriting process. Will impact on the outcome and the interest rates on offer in the medium term. 

K_S

@JBKSTN Sorry to hear about the problems you're having currently, hope it takes a turn for the better in the new year.

With regard to impact on your credit history and potential remortgage, just to be clear there is no identikit way in which creditors treat these and each future mortgage lender does their own credit assessment which may give different weights to parts of your credit history. Having said that -

- beyond the AP marker, how exactly this will be reported on your credit report will differ from lender to lender

- even though this is arranged, the expectation usually is that the debt will revert back to the original terms at some point. Arrears are calculated against the original terms, so your credit record will likely show that you are getting behind payments (ie in arrears) even as you continue making these agreed lower I/O payments. And the AP marker.

- secured loan (like a mortgage) arrears are seen as more serious than unsecured arrears by lenders, and this arrangement will almost certainly nix your chances of a mainstream remo in 18 months, and that's assuming your account is no longer in arrears by then. As an example, a particular sub-prime lender's credit history criteria specifies that the borrower can have no secured loan arrears that are less than 24 months old.

- even if you want to move to a rentention product (ie a product transfer), if you are in arrears at that point, some lenders may not permit a PT or permit one only after a manual review.

- the good news is that an arrangement to pay is seen in a much much better light than a default. Creditors would prefer to see an AP in your history rather than a default. Also, time is the best healer in these scenarios.

If at all possible, I would strongly advice that you attempt to get independent debt management advice from a charity like Stepchange or CAB.

I hope that helps. Good luck with getting back on track over the coming months.

CSL0183

I would say do all you can to avoid the Arrangement to pay on your credit file as it will be frowned upon by lenders and make getting the best deals difficult. For sure your file will take a hit and I believe they remain and negatively impact your score for at least 12 months but upto 24 months with some lenders. 

getmore4less

JBKSTN said:

MWT said:

... also when you say 'remortgage' do you plan to move house or remortgage with a different lender, or is it just that your current fix ends in 18 months time?

If it is just the current fix expiring then you will probably be able to take a retention product from your current lender without re mortgaging...

... and do make sure you understand what these 'holidays' are going to cost you in terms of increased monthly payments or changes in the term, and consider if you have the option to overpay when your finances as strong again so you can reduce the impact the holidays have had on your total payments over time...

Thanks for your reply. 
The bank confirmed that they would report an "A" for Arrangement, as I would continue paying the interest, as I have been the past 3 months. I did this to ensure that our monthly amount wouldn't' increase any more than it had after taking the first 3 months as a total mortgage break.  
I didn't know about the retention product info, we will remortgage because our current fix ends, also because we've done a house renovation and would like to mortgage against it's value since the work done.
Appreciate your advice.

Paying interest only does not stop your payments going up when you restart as every capital payment missed has less time to be repaid.

Also if you want to borrow more it could impact even with same lender.