Are Mortgage Payment Holidays Really “Risk Free”?

Wednesday, July 22nd, 2020

The mortgage market is about to enter a new phase following the end of the many mortgage payment holidays that were taken out by the millions of people who found themselves seriously impacted by COVID-19 during these difficult and unprecedented times.

Are There Consequences to Payment Holidays?

Although it was a Government initiative and reassurances were given that payment holidays agreed in advance on mortgages, loans, or credit cards would not be treated as ‘missed payments’ (and therefore not leave any adverse marks on credit files), there may be a consequence of doing so.

Whilst any pre-arranged mortgage payment holidays will indeed not be regarded as missed payments or arrears (lenders mostly use sophisticated credit scoring systems which drill down to payments which have been made and balance any changes), it is feared that when any prospective lending is taken into account, this may not turn out to be the whole story.

Even after payment holiday arrangements had ended and regular payments resumed, some lenders were always likely to factor in this information into any future credit scoring decisions which in turn may result in some applicants experiencing difficulty in accessing credit or obtaining mortgages (or indeed remortgages) for months to come.

Consequently, many professional mortgage brokers, such as ourselves here at Caboodle Finance, have been in regular contact with mortgage customers throughout the unfolding Coronavirus pandemic to ensure that clients do not then go on to make any decisions they may later regret.

Get Advice Before Taking a Mortgage Payment Holiday.

So before contemplating taking a new payment holiday or, perhaps, extending an existing arrangement, it is vitally important to engage the services of a professional mortgage broker in order to fully determine what the short or medium term implications for any subsequent applications or extensions might be.

The Importance of a Mortgage Broker Who Knows the Market.

With cumulative experience involving multiple customer scenarios, an expert broker will be able to gauge how a particular lender is likely to react in any given circumstances, which in turn will help to reduce or even eliminate the need for multiple applications to different lenders and worse, possible repeated declines.

Our team always does its utmost to ensure that clients receive great mortgage advice and consequently get access to products that are tailored to their individual circumstances; just check out our testimonials by clicking HERE

Speak to a Mortgage Broking Expert.

If you would like to know more about how we can help you with all of this, just call Caboodle Finance of Sutton Coldfield, Birmingham today on 0121 308 9114 to see how our one of our mortgage broking experts could help you. Alternatively, click this LINK to contact us via the website and one of our friendly team will be in touch as soon as possible.

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