Mortgage holidays not 'cut and dry' as lenders restrict services and products - ...

Martin Lewis advises caller on mortgage holiday impact

Mortgage holiday rules were among the first coronavirus support measures introduced by Rishi Sunak in early 2020 and while many have utilised the pauses thus far, caution was urged on their usage in The Property Show podcast. When discussing the holidays, Andrew Montlake warned they shouldn't really be called "holidays" at all and highlighted interest will be added onto the debt when they're finished.

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On top of this, Louisa Fletcher brought up another issue associated with mortgage holidays which could have long-term ramifications: "The government was at pains to say that if you took a mortgage payment deferral option, it wouldn't leave a black mark on your credit rating.

"However, there are some people who have found now they've come out the other side of all of this, you know they've come off furlough they're back at work, everything's come back to normal, and they've decided they want to move house or perhaps they're still staying where they are, but they want to remortgage.

"They're finding that the fact they've taken a mortgage payment deferral previously is now creating a challenge for them when they're applying for a new mortgage."

Louisa asked Andrew for information on why this is happening and the mortgage expert broke down what's going on behind the scenes with lenders.

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LendersLenders are reacting to mortgage holidays (Image: GETTY)

Andrew explained: "Yeah, the Government was very at pains to say first of all that it won't affect your credit rating at all, you're right and for the most part, they are right in that.

"It doesn't actually go down as a mark against you on your credit rating.

"So that's good, however, we have now seen that some lenders are taking it into account, especially for people who are in the middle of that holiday.

"So if your mortgage rate happend to come up and be up for renewal while you're taking that holiday, you won't be able to remortgage to another lender until you're out of that payment holiday.

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