“Don’t jump on the repayment holiday bandwagon”

by Property 118

8:33 AM, 16th April 2020
About 4 months ago

“Don’t jump on the repayment holiday bandwagon”

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“Don’t jump on the repayment holiday bandwagon”

Mortgage broker, Mortgages for Business, are warning landlords not to spoil bank’s goodwill towards landlords in real trouble by applying for a payment holiday if you don’t need one. They report most landlords enquiring about payment holidays are not struggling to pay their bills and only a minority calling its switchboard have legitimate concerns about covering their costs.

Mortgages for Business managing director Steve Olejnik said in a statement: “We are having a lot of discussions with landlords around payment holiday requests. “Only a handful of them are raising legitimate concerns about how to pay their mortgage in the face of the covid-19 pandemic.

“Landlords must be aware that any requests could potentially damage any approaches to that lender.

“Lenders expect landlords to be able to cover void periods under normal circumstances so they will not take kindly to landlords trying to take advantage of them just to build up some cash reserves.

“One borrower with three live cases with their lender approached them for repayment holidays on another, existing loan. The lender immediately cancelled all three.

“Smart landlords, who want to capitalise on short-term house price falls and expand their portfolios when the lockdown is lifted, should think long and hard before approaching their lender.

“Don’t jump on the repayment holiday bandwagon. Any deferred payments will have to be made at some stage and it could create problems down the line especially when you come to refinance.”

Most Buy to Let lenders will ask landlords to prove they are in financial hardship before granting any holiday request.



Comments

Rbinscotland

12:36 PM, 16th April 2020
About 4 months ago

A payment holiday could be taken at anytime ( with or without Credit reference issues) however anytime not just Covid19 reasons. It sounds like all BSor Banks are saying take a holiday it wont effect your credit score. Or is that wrong. They may not effect the credit score, but does the BS or bank have a folder on individuals that may effect them later - Is that even legal.
I have a few mortgages and some are capital released on a purchase for a different property. So if tenant in property A cant pay the 2nd part the capital release part used on a different property purchase is also affected. As a scattergun effect I have asked for payment holidays for ALL. And once the dates kick in I will revert some to restart paying again. Any surplus will have to go to my C Card and other bills.

Chris Jordan

13:53 PM, 16th April 2020
About 4 months ago

Agreed, when I spoke to all my different lenders, none of them had an issue at all and all confirmed in their recoded phone calls that credit files will not be effected, this is also stated on their online forms for completion. As I previously understood, a payment holiday prior to Covid19 would effect credit files unless there was a credit already on the mortgage account that offset the holiday period.

Hardworking Landlord

9:25 AM, 17th April 2020
About 4 months ago

I think the issue is not that the payment holiday will affect your history, but your chances of re-financing later on. I heard yesterday that in the terms of a new mortgage there was a question asking if the applicant had requested a payment holiday due to Covid 19 so this would indicate they are taking this into consideration.

Chris Bryan

14:55 PM, 17th April 2020
About 4 months ago

if the banks would move faster then you could wait and see but some are taking for to long to say yes are no don,t get me wrong some have been brilliant but some are taking 3 weeks to reply we cant wait until the mortgage is due to be paid you have to plan at least a month in advance

Mike

16:01 PM, 18th April 2020
About 4 months ago

Reply to the comment left by Hardworking Landlord at 17/04/2020 - 09:25
This is quite a serious and troubling matter.
Can you specify where you heard this for which lender please?
When you say a new mortgage, you meant a new mortgage for purchase, a remortgage with different lender or a switch deal with the same lender?

Thanks

Jonathan Clarke

1:26 AM, 19th April 2020
About 4 months ago

I`m not taking any mortgage holidays

If I did my credit rating may not get affected but the question would / could be raised on any future application. And if I were a lender and i was in two minds about lending i would be def be using the `he took a holiday during covid` as a perfectly legitimate factor to decline that application.

As soon as a tenant fails to pay the rent one month even if they make it up the next month that fact is indelibly locked into my mind that they failed to pay . It will forever become a factor down the line when I`m making a decision about them in the future. If they were for example to ask me for an upgrade a year later I would be naturally thinking - Can you really afford it as you let me down once before . A lender will be thinking exactly the same .

So I say only do it if you really really need to .
Don`t do it just because you can.


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