Mortgage paperwork and house keys

Mortgage Payment Holidays – Who Can Apply?

Right now, mortgage payment holidays are an excellent option for some borrowers. The coronavirus lockdown has led to some people losing their jobs, for example. For those who are unable to make ends meet and keep up with monthly payments, a pause in mortgage outgoings is likely to help in the short term.Buy-To-Let landlords are not immune to the situation, either. Some tenants may be asking their landlords for a rent payment holiday due to the current climate. For others, a failed property sale that might have added to a landlord’s cashflow, for example, could leave them struggling to pay their mortgage.

Mortgage payment holidays for landlords work in the same way as for owner-occupiers. Landlords must apply to their lender, who will be able to accept or reject the application

Whether you should try and get a mortgage payment holiday obviously depends on your individual circumstances. For those who will genuinely be unable to cover their outgoings, or will have to choose between a mortgage payment and other essential items, it could be a good option.

However, some brokers are advising landlords against this if they can possibly help it. According to Mortgages for Business, a lot of landlords enquiring about mortgage breaks are not actually unable to cover their payments.

When the government introduced the measure, it reassured people that their credit scores wouldn’t suffer. Though this is the case, it could still affect how lenders view borrowers.

Steve Olejnik, managing director of Mortgages for Business, says: “We’re having a lot of discussions with landlords around payment holiday requests. Only a handful are raising legitimate concerns about how to pay their mortgage in the face of the COVID-19 pandemic.”

Olejnik adds: “Landlords must be aware that any requests could potentially damage any approaches to that lender. Lenders expect landlords to be able to cover void periods under normal circumstances – where a property is empty, and a landlord isn’t getting any rent – so they won’t take kindly to landlords trying to take advantage of them just to build up some cash reserves.

“One borrower with three live cases with their lender approached them for repayment holidays on another, existing loan. The lender immediately cancelled all three. Smart landlords, who want to capitalise on short-term house price falls and expand their portfolios when the lockdown is lifted, should think long and hard before approaching their lender.”