Mortgage payment holidays: what landlords really need to know
All lenders, large and small, have been asked to make difficult decisions across many aspects of their business. They have faced a huge amount of pressure from the Government in terms of having mortgage payment holidays forced upon them at relatively short notice. In general, lenders have reacted quickly, effectively, and decisively but how are landlords responding to this issue?
It depends on the individual in question, and there are many factors to consider before deciding upon this option.
- Taking a mortgage payment holiday should not impact your credit history and it can help with cashflow if tenants are struggling to pay their rent
- Keep in mind that if you’re trying to finance a new purchase at the same time as requesting a mortgage payment holiday then lenders may take this into account and could take the decision to reject new applications during this period
The big question all landlords should be asking themselves is – do I really need to take the mortgage payment holiday?
It’s a prudent time to reiterate that this is not free money or that the payment will be written off by your lender. Most lenders will simply add any missed payments to the mortgage balance therefore increasing future monthly payments as interest will have accrued during the holiday period. The FCA have confirmed that interest on mortgage balances will still be charged unless a lender has stated otherwise.
We are clearly in the midst of some challenging times, and some landlords may be experiencing more problems than others. The mortgage payment holiday is a highly positive Government initiative to help those homeowners, tenants and landlords who are struggling in the current economic climate. But it is not there to be abused and needs careful consideration before any uptake.
So, do your research, seek professional advice where possible and make sure you speak to your lender before taking any action. And whatever you do don’t just cancel any mortgage related direct debits until you have an agreement in place with the lender. This could cause credit and arrears complications further down the line.