Those who took mortgage holidays - are you extending yours ?

[Rebelwithallthecause]

Now the government have arranged for lenders to increase the mortgage holidays for by another 3 months will you be extending yours?

Not sure yet. I think I would like to extend it by a month.
My lender hasnt said anything yet tho.
Should they ask, or do we have to request it again

Im with Halifax. who you with?

We did. We're fine at the moment but high chance DH could lose his job later in year so we are putting the money aside in case. We would extend but there is talk of it affecting your credit record, think it's still being decided. We won't extend if that is the case.

I’d like to ask I’m really unsure what the future hold for us right now when will it be announced?

@Seahawk80 that's a really good point actually. I haven't taken a mortgage holiday yet and have been struggling through on my furlough pay. We are a single income household. 1 adult, DS who is 5 and our dog. My job too is becoming less secure so keeping the money aside is very sensible.

I've recently heard though that taking a holiday may affect your credit rating. Something which i really don't want to do. I am due to remortgage next year (praying I will be able to) so I don't want anything to jeaprodise it

@SpideyMom as far as I know the 3 month break is done but it's extending it to 6 months that may affect it. The CEO of nationwide (who our mortgage is with) has said it shows people are struggling. I'm hoping that will be overthrown as we wouldn't be struggling if it weren't for coronavirus! We have another month so am just keeping an eye on things but it's probably worth calling your provider to check about the 3 month break.

Does the 3 month holiday change your payments by much? I should have done it to be honest. I suppose I've desperately been wanting to keep some form of reality but I never thought I would ever be still off work, and it could go on much longer, and if it does, will I even have a job. I am petrified.
I'm with RBS, so may ask, but if it will affect me in any way when it comes to remortgaging then I'm going to have to just manage through

@SpideyMom ours went up by about £10 a month (around £1100 a month payments). It's all so crap isn't it. Also realised my previous post should have said 3 month is fine- not 3 month is done!

Yes but we are way ahead on payments so shouldn’t affect us too much

I think we will be. We currently can't afford to pay it but our business income is slowly starting to creep up again. I have taken full time work so we will be able to put most of my wage away and live off a trickle of business income meaning if we're still struggling later after the mortgage holiday we'll at least have some mortgage payments in the bank. My mortgage is very big. It's almost all my full income as a full time teacher. We lost about £6000 a month income before I went back to work. It'll be a while before we're comfortable again.

Please don't take a mortgage holiday unless it's your last resort. Taking it to bank the money in case of redundancy in future is very unwise. It shouldn't affect your credit rating (not the first 3 month holiday at least) but the ratings agencies do not decide whether or not you get approved for a loan. They are just gatekeepers. With a good credit rating you don't get automatically rejected but nor does it mean you are approved. You will likely still have to declare that you've had a mortgage holiday and in view of this lender(s) may reject you when you come to remortgage, or charge you higher rates to offset the additional risk you present as a borrower.

It's a good scheme when in dire straits but NOT to be used on a whim.

There needs to be some proper clarity on the effect a mortgage holiday will have on your credit score. Peoples lives have been turned upside down because of this. It really isn’t due to being irresponsible. What I really want to know is will it make a difference if you just want to do a product transfer not a full remortgage. With a product transfer the bank so say do not do credit checks?

@Beaniebeemer I think there has been clarity that the 'first round' of mortgage holiday won't affect your CS. I'm not aware that they (they being the ratings agencies, Experian and the like) have confirmed that it will or won't affect your CS if you apply for an extension, or apply (for the first time) later in the year, e.g. what happens if you lost your job in March but manage to cling on until October, still no job and you then need a holiday? I agree there needs to be urgent clarity.

But I stand by what I said, even if it doesn't affect your CS please do not do it if you don't need to. It is all to early to say but there's a risk that a bank will decline you (either for a specific rate, or altogether) when you come to remortgage because you have had a holiday. It is a standard pro forma question banks ask. And if you say 'yes, i had a holiday in March - October 2020 because of Covid' from a bank's perspective you are not a particularly attractive loan candidate, because you are telling the bank that you had zero savings and that as soon as COVID hit you were unable to meet your essential expenses.

I know this sounds harsh, but that's not what the banks sign up for when they lend. That is why they want to know all your outgoings and set expenses (childcare, HP, credit cards, life insurance, phones etc) and why they make sure you have plenty left over every month after clearing those expenses and the new mortgage they are about to give you. When people say that, effective March, they had the wolves at the door, they do not appear to be attractive loan candidates.

I am not saying this is 'fair', I'm just trying to explain the bank's perspective and ONCE MORE FOR EVERYONE IN THE BACK, why you shouldn't apply for a mortgage holiday unless you really need one.

Fair point. I always struggle to remortgage due to being on a low income (single income household) and having a dependant. It was childcare the last time that got me refused. I was paying out more than double my mortgage. Childcare now is miniscule in comparison but as my situation isn't the best being a one income house hold and it being low I will battle through as i am. I said earlier in this thread I don't want to jeaprodise my chances next year. I already expect it to be hard times with everything that has gone on this year

@DilemmaDame if you don’t mind me picking your brain?
Based on what you’ve said, if you then start to overpay your mortgage, would that help mitigate it do you think? I have 5 years roughly until we are due a new deal and did take the 3 month mortgage holiday. Although technically it was borderline we needed it, we have had quite a reduction of income so I’m glad we did. Our thinking was that if we weather this ok (please, fingers crossed) we would start overpaying to make up what we didn’t pay and more besides (funds permitting). Just wondering if you or anyone else would know whether this approach would help. Many thanks.

I would be quite sure any overpayments help.

I’m in similar position - the mortgage holidays was needed initially and we hope to overpay when things improve which they look likely to do, but probably not until early next year

Thanks @Rebelwithallthecause that’s what I’m hoping. Sending good wishes to all.

Hi @Asgoodasarest I'm not a broker this was just how my broker explained it to me.

I don't think the banks take over payments into account per se as those are discretionary and not guaranteed. Much like how they don't take bonuses into account and only lend on thl basis of base salary. But you'll improve your LTV by overpaying which is always a tick in the 'good' column. So I would overpay if you can afford to yes, for sure. Never a bad idea.

However even if you catch up / overpay, if I'm being honest it's the fact that you fell into financial difficulty that has the potential to be a tick in the 'bad' column.

The same way a default judgment from 5 years ago for £60 might stop you getting a mortgage for £500k on a salary of £150k now. The proportionality of it doesn't come into it unfortunately.

At the end of the say what's done is done and you'll be fine when you come to remortgage it's just you might maybe have been in an even better place without the mortgage holiday, and why I just want to caution people against this unless they need it.

I know what you are saying about mortgage holidays but this was an extreme unprecedented situation. In normal circumstances I know mortgage holidays aren’t seen as a good thing but surely forbearance comes into play here?

Thanks @DilemmaDame. I would be disappointed to be penalised given the assurances that were put out when we took it. But ultimately keeping the household going is our priority and if we manage that then we will face any future issues as they arrive. Thanks for the thread OP, it’s been helpful to a few of us I imagine.

It might and it might not no one knows yet. Rules evolve and adapt and the banks might in future ask 'have you ever had a mortgage holiday other than during covid?' when you apply for products. We can only guess!

I think the risk is just that if you lose your job you should have some savings to tide you over. If you don't that's OK but you are not a gold-plated blue chip candidate for a mortgage and I suspect most banks will still lend but some 'stricter' ones might not and some particular rates or products (BTL) might be difficult to get. Maybe. We'll see.

Makes sense. Looking at the news surrounding this once you made me aware of it, I think it looks like it could impact you depending on the lender. Oh well, I’ll do what I can to help it once we are in a position to and cross that bridge when we get to it. Thanks @DilemmaDame

www.google.com/amp/s/www.bbc.com/news/amp/business-53222765

This article is helpful in explaining banks' attitudes to mortgage holidays.

Hi everyone,

I’m just coming to an end of a three month mortgage holiday of three months. I’m still furloughed and it sure as yet when I’ll return to work. Even if I’m made redundant, there will be a three month consultation period,so I’d have some time to decide what to do.

As I’m still furloughed, I’d like to extend another three months, with a view to cancelling this if I return to work. I’m with the Halifax. Does anyone know what the policy is with regards to extending a mortgage holiday, and if the extension affects you’re credit rating??

Sorry just read above link. It’s terrible if people are penalised for taking the three month holiday, when we were told it wouldn’t affect this! This was an unprecedented situation and millions of us were furloughed, taking a 20% pay cut.

I'm regretting taking the first payment holiday now that I read that it may affect my chances of getting a new mortgage as I'm hoping to move in the next 12m.

I would have struggled without it but would have somehow scraped the money together. I was under the impression that there was an agreement that this holiday wouldn't reflect badly on future applications.