If you were a lender how would you look at a request for a holiday?

by Howard Reuben CeMap CeRER

13:58 PM, 28th April 2020
About 4 months ago

If you were a lender how would you look at a request for a holiday?

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If you were a lender how would you look at a request for a holiday?

I had an Agreement in Principle (AIP) for a Client declined by Paragon yesterday due to credit issues,  BUT the credit file is more or less a perfect score, no missed payments, long historical residency, no CCJ’s etc etc i.e. no adverse.

I spoke with Paragon about this and we couldn’t work out what the problem was.  Paragon is coming back to me (hopefully) with some clarification.

However, during the conversation with my Client, I was telling them all the reasons why an AIP is usually declined and they didn’t fit any of those reasons…. until I suggested as an off-the-cuff remark, that some people are rushing in to the Covid-19 payment holiday arrangement, and they then said that yes, they had called all of their lenders (resi and BTL’s) and taken a payment holiday on all of them.

We know that credit reference agencies are not being updated with these payment holidays as an adverse entry, but it does make you wonder if there is a behind the scenes record, and/or if the lenders are sharing this data between themselves to protect the banking industry.

I told them (as I am telling everyone) it is not a holiday to enjoy at leisure, it is seen as, and deemed to be, a declaration to the lender that the borrower has very quickly fallen in to financial hardship and they are formally asking for a deferred payment because they are implying that they can’t afford the payments due to no back up plan i.e. no savings or other financial resources to continue to meet their obligations.

If you were a lender, how else would you be looking at this request not to pay?

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Comments

JamesB

10:32 AM, 29th April 2020
About 4 months ago

What lender isn’t going to adversely factor applicants who can’t manage past a few mortgage payments without loss of rent .. it’s like saying if my property is void for a while I can’t pay the mortgage

Jan Martin

10:36 AM, 29th April 2020
About 4 months ago

Reply to the comment left by JamesB at 29/04/2020 - 10:32
Yes I have to agree with that James.

Sam Smith

10:52 AM, 29th April 2020
About 4 months ago

I decided to take a holiday payment with Kent Reliance.
I then decided to take a remortgage with them. But there was a condition I remove the holiday payment, otherwise they won’t lend to me! I decided to cancel all my holiday payments, and pay the mortgage payments in full.
Take this as warning, if you can afford to make the payments, pay it, otherwise you will not be able to refinance/fund purchases with lenders if you had a payment holiday in the future.

Keith Mason

11:23 AM, 29th April 2020
About 4 months ago

Its time the lenders and the Banks were given a good kick, their greed and arrogance is out of control. When did it become acceptable to post profits in the billions per quarter whilst continually increasing charges and reducing services. They seem to think that they can increase interest rates at a whim when the BOE rate is at an unheard of low and dictate who can have a Corvid 19 payment holiday.
I have taken payment holidays and the only lender who I have had problems with is Lend Invest who seemed to want everything including a blood sample before submission to their 'credit committee' for review; they are now on my black list for future borrowing.

david porter

12:06 PM, 29th April 2020
About 4 months ago

If you were a bank manager with cheap mortgage
company AUDI Q7
AND 2.4 kids , family BUPA and school fees,
why would you feel the need to take a risk?

Monty Bodkin

12:19 PM, 29th April 2020
About 4 months ago

It surprises me that people think lenders wouldn't look at this.

If a rental business is so flakey it needs a handout at the first sign of trouble then obviously they are going to be wary of lending in future.

Penny DJ

1:58 AM, 30th April 2020
About 4 months ago

I don’t think you can have it both ways. Asking for a mortgage holiday is telling them you can’t afford to pay your mortgage currently and are in financial hardship, and taking out a new mortgage requires a declaration you can afford the repayments. One of those statements is either a lie or chancing their arm. Banks don’t like either.


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