Will mortgage payment holiday affect your credit score?

Mortgage market update regarding covid-19

Mortgage payment holiday (MPH) is available to both residential and buy-to-let mortgages.  However, some lenders for BTL mortgages will request evidence that covid-19 has affected the tenant’s income before allowing a payment holiday.  Check with lender for criteria.

Mortgage payment holiday will not affect your credit profile as long as the mortgage is currently not in arrears.  However, any deferred interest will be capitalised to the main loan and monthly payments adjusted after the holiday to reflect the new total loan.  Therefore our best advice is, if you can afford to pay the mortgage, pay it and not to take the payment holiday.

Current holiday period is to end in June.  But the holidays are to be extended for further three months to September by the FCA.  Application is a simple online process with most lenders.  Ban on mortgage repossessions have also been extended simultaneously.  

There will be no adverse mark on the credit file for this period, however, FCA has warned that lenders may take in to account overall financial status to assess lending on top of the credit file. 

Borrowers are “encouraged” to maintain mortgage payments if possible, whether fully, partly or converted to interest only.  

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