Private Finance comments on three-month mortgage holidays
Chris Sykes, mortgage consultant at Private Finance, the mortgage broker, comments on announcement of three-month mortgage holidays.
“While many holiday plans are in disarray, mortgage borrowers will welcome a break from monthly repayments in the current climate. The biggest beneficiaries are likely to be customers who are self-employed or have little saved to help them through these challenging times. A mortgage holiday will ease concerns about loss of earnings if people are isolated for any period or if their working hours are reduced due to business closures.
“This flexible relief is an intelligent move for both lenders and borrowers. Lenders will reduce the risk of having ‘bad debt’ on their books if customers miss payments without taking a mortgage holiday, which can reflect poorly on their business and make it harder to raise finance in future. Customers can rest easier by avoiding the danger that a missed payment creates a blemish on their credit profile which lasts longer than the current pandemic and limits their borrowing options for three years or more.
“Customers need to be mindful that pre-emptive action will be key to making the most of a mortgage holiday. It will be important to agree deferred payments with their lender in advance, so they are not recorded as missed.”
Kindly shared by Private Finance