Payment holidays can hurt your back door mortgage application chances

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Martin: “We are waiting to see how big the impact will be – but those who need mortgage leave should still do it”

Martin Lewis, Founder of MoneySavingExpert.com, said: “The FCA has unfortunately confirmed that while credit records should not be affected by mortgages or other payment holidays, lenders are still allowed to take them into account. account in their acceptance decisions.

“It’s impossible to say yet how widespread this will be or how big the impact will be – we’ll start to learn that over the next year or so. Every lender’s assessment process is different, that is. dark art that is hidden from the public and never released, so this is probably another factor that contestants will need to use.

“Certainly many new challenger financial firms are talking about their new, more sophisticated client scoring models, which they think are better than just relying on credit records. It is this very fact that prompted me to look at that first, and as they will, being able to see that someone has temporarily not paid their mortgage, they can spot the payment holidays.

“My hope is that as this vacation is specifically for the short-term financial blow of the coronavirus – and the practice is so widespread – it won’t be used by many businesses, and where it is, it won’t tarnish.” personal credit. reputation for too long. But there is no way to find out.

“More importantly, I don’t think that should stop anyone who needs mortgage leave from getting one – if it’s critical to cash flow, do it. Yet for those on the border, who can find it temporarily useful but can get by without it, add that to the fact that interest accumulates during the payment holiday and I would be careful. “

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