The number of property owners taking a Mortgage Payment Holiday during this pandemic has raised many questions about affordability, especially in the buy to let mortgage market. We asked our buy to let lenders what their approach to new applications from those who are taking or who have taken a Mortgage Payment Holiday recently is. Here’s what they said...
The number of property owners taking a Mortgage Payment Holiday during this pandemic has raised many questions about affordability, especially in the buy to let mortgage market. We asked our buy to let lenders what their approach to new applications from those who are taking or have taken a Mortgage Payment Holiday recently is. Here’s what they said...
Over the last few months, we have written about the Government's Mortgage Payment Holiday (MPH) scheme, and how landlords should hold off from applying for the support unless they were in genuine need of the financial assistance. It was initially announced that Mortgage Payment Holidays wouldn't affect your credit score (which they do not), however, there has been much speculation and opinion that there would be an impact for those looking to take on subsequent mortgage borrowing.
As lenders have worked to develop their underwriting to handle clients who have taken Mortgage Payment Holidays, we have been working closely with lenders to understand how it will impact you, our clients. When we initially spoke to lenders last month, the response from lenders was that they were judging applications on a case by case basis. As lenders have evolved their underwriting, we've worked closely with them to stay at the forefront of who accepts what.
From our research, we have had feedback from 36 lenders in total, at the time of writing. Generally, the lenders fall into one of 4 categories:
- 9 lenders accept applicants who are currently on a mortgage payment holiday.
- 18 lenders accept applicants who were on a mortgage payment holiday but have finished this and have paid at least one month's payment since.
- 16 lenders always refer applicants who have taken or are on a mortgage payment holiday to underwriting to review each case individually.
- 2 lenders always decline applicants who are currently on or have been on a mortgage payment holiday.
(Note: Some lenders fall into more than one category - e.g. accepting both those on a payment holiday and those who were on a payment holiday)
While the above categories make this look reasonably straight forward, lenders criteria do vary - some require you to have made three monthly mortgage payments since your payment holiday ended, for example. Some require the applicant to demonstrate they can afford the payments going forward.
The good news from our research is only 2 out of the 36 lenders refuse to accept applications from those who are on or have taken a mortgage payment holiday. So if you have taken a mortgage payment holiday or are currently on one, and you need a new mortgage, please do get in touch with us, as there are options out there for you. We can help guide you to the right lender for your circumstances.
If you have taken a mortgage payment holiday and would like more guidance on which lender you would be eligible to apply for a mortgage with, please contact one of our experienced team of brokers on 0345 345 67 88.