A Mortgage Holiday Is It Essential?

apple finance mortgage advice in wolverhampton

Sometimes referred to as payment holidays, where you contact your lender and explain that you are struggling financially because of the coronavirus crisis. Now some members of the public have thought that they would have a three month break with no costs and then the payments would resume.

Sadly, however this is not the full story all the lenders will calculate the interest and add this on, after the three months has passed interest will be added on a monthly basis to the amount you normally pay. Only take  a mortgage holiday if you really, need to. Why you may ask well let’s call it by its real name which is a deferred payment break, there are no holidays involved here. Let me explain a client contacted me to have a quick chat about their plan to contact the lender and request the deferred payment plan for three months.

So I said only if you really need to because if you take the payment deferment although it is unlikely to show on your credit file there are consequences. In the future if you approach your lender or if you change to a different lender whether that’s a remortgage or a purchase they will ask any deferred payments? The reason is lenders look for security and if a client has had to request a payment deferment this could signal the fact that there money management skills are weak. Is this client ready to remortgage or mortgage a new property if they cannot pay their bill’s in the short term?

The jury is out on this issue but a large proportion of the mortgage lenders out there will use this as a criteria question. For some clients this will weaken their mortgage application. My solution as a mortgage broker going forward will be to compile a database of lenders and banks who don’t add this to their mortgage criteria.  Contact Paul on 01902 213201    info@applefinance.co.uk  for a one to one consultation via whatapp or zoom


 

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