Anybody applied for a new mortgage after taking a payment holiday on current mortgage?

277Hz

So here's our situation...
In the process of buying a bigger house outside the city as our small one bed flat in London is proving difficult as a home working space!
Last year we took a 3 month payment holiday from August to October on our current mortgage as my wife's hours were reduced at work and there was a risk of redundancies due to COVID (she worked in a museum that has obviously been closed for months). She has since changed jobs to a much more secure (home) office based job. During the payment holiday we made manual payments for the interest in full each month (about a third of the normal payment) so the amount owed never increased.

Our new mortgage will be an 80% LTV and we both have excellent credit ratings and no debt other than one student loan between us.

I'm aware that the payment holiday shouldn't affect our credit score, and have seen lots of discussion that lenders can 'take it into account' in their decision, but haven't heard of anyone's experience with what this actually might mean yet. We discussed the payment holiday with our broker and they didn't seem too concerned about it being a risk for our application. However, the lender (Leeds BS) has come back with a specific question on whether we have taken a payment holiday which has started to make me worry!

Anyone else in a similar situation? Has anyone been successful (or rejected!) for a new mortgage after a payment holiday?

K_S

@277Hz I have had a couple of clients who went on to offer after having taking short payment holidays in the summer. The lender wanted to assure themselves that the reason for taking the payment holiday back then is no longer relevant, which is probably what Leeds want to do as well. I hope that makes sense.

Thrugelmir

Circumstances obviously differ from person to person. At a broader level a payment holiday indicates a level of financial stress. No emergency savings to cover even a short period of reduced income. The impact from Covid is far from over. Lenders are under a duty to lend responsibily. A factor which will be influencing their decision making. 

277Hz

K_S said:

@277Hz I have had a couple of clients who went on to offer after having taking short payment holidays in the summer. The lender wanted to assure themselves that the reason for taking the payment holiday back then is no longer relevant, which is probably what Leeds want to do as well. I hope that makes sense.

Thank you K_S that is encouraging.

Thrugelmir said:

Circumstances obviously differ from person to person. At a broader level a payment holiday indicates a level of financial stress. No emergency savings to cover even a short period of reduced income. The impact from Covid is far from over. Lenders are under a duty to lend responsibily. A factor which will be influencing their decision making. 

Thanks Thrugelmir. I agree with this to a point but would extend what you say to "a payment holiday indicates a level of financial stress in a global pandemic with many uncertainties." I agree with you that the impact from Covid is far from over but would argue that there is at least a little more certainty now that we have been living with it for nearly 12 months. As you say circumstances differ from person to person, but for us the situation is very different now than it was last summer. To be honest I regret taking the holiday, as we could have afforded the payments the way things ended (and we did make partial payments), but there was a risk of redundancy for both of us that could have changed this.  

JM2194

Hi,

we had a payment holiday and we got offered a mortgage. Hope that helps

277Hz

JM2194 said:

Hi,

we had a payment holiday and we got offered a mortgage. Hope that helps

Thank you JM2194, that does help.

Thrugelmir

277Hz said:

 To be honest I regret taking the holiday, as we could have afforded the payments the way things ended (and we did make partial payments), but there was a risk of redundancy for both of us that could have changed this.  

You did what was right at the time. We all sometimes are forced to make immediate decisions. Have you cleared the amount that you deferred since? 

277Hz

For the benefit of anyone searching for this topic in the future - we received our mortgage offer today! No further queries or conditions relating to our mortgage payment holiday.
Thanks all who posted.