Nat West - Payment Holiday - refused new mortgage

Mazzsuzy

Looking to see if anyone else has experienced this? I have a mortgage with Nat West and applied to them for additional borrowing. I didn’t get through the soft check. There is no issue with my credit file or my mortgage payments, but I did take a 3 month payment holiday with them at the start of COVID. This is the only reason I can think of as why the application wouldn’t go through. I’ve now applied to Barclays and the offer was approved within 15 minutes of the advisor submitting the full application !!

lonibra

I'm not surprised. You might not fit NatWest risk profile anymore for increasing borrowing with them. Since you've now got a mortgage through Barclays I suppose it's all good so nothing to stress about.

Mazzsuzy

Thanks - I thought payment holidays weren’t supposed to impact on your credit or future borrowing - was I being naive? 

RelievedSheff

Mazzsuzy said:

Thanks - I thought payment holidays weren’t supposed to impact on your credit or future borrowing - was I being naive? 

Yes.

Natwest now see you as too a risky borrower as you couldn't afford to keep up your repayments and took a "payment holiday"

SeanG79

Payment holiday wasn't supposed to impact your "credit score" but no underwriting system (automatic or manual) is going to increase exposure to someone who so recently needed a payment break. They will want to see a stretch of time (may be months or a year or two) with normal payments resumed before considering lending more. 

HobgoblinBT

Mazzsuzy said:

Thanks - I thought payment holidays weren’t supposed to impact on your credit or future borrowing - was I being naive? 

Yes.  

From a former lender’s point of view, your application for further borrowing may have been approved by your original lender had you made up the missed repayments in advance of the application.  This would have demonstrated your affordability of the original loan and a short term higher or ad hoc repayment to the lender confirming that they were right to support you with a repayment holiday, and a further advance.

firstbuyer

Just jumping on, if you had made overpayments after taking the holiday - does that help balance out?

Thrugelmir

Everybody's circumstances differ.  The full impact of Covid is far from over. 

SeanG79

If you were currently up to date then possibly - lender will be looking at the overall credit covenant and affordability calculations. 
Remember from a lenders perspective, people needing a payment break were likely at their max when Covid hit, without savings to see them through, so it will naturally raise affordability questions