Should Landlords Think Twice Before Requesting a Mortgage Holiday?

Posted on April 16th, 2020

One in nine mortgage holders in the UK has taken a mortgage payment holiday as their finances have been affected by the coronavirus.

Landlords are being encouraged to think twice before requesting to defer mortgage payments. Broker ‘Mortgage for Business’ has said that only a handful of landlords contacting its switchboard about mortgage repayment holidays are raising legitimate concerns about how to pay their mortgage during the coronavirus pandemic.

Whilst there are landlords who find themselves in genuine financial hardship, the broker said that many landlords who are applying for the holiday do actually have sufficient means to get them through this difficult period.

The managing director of Mortgage for Business said that apart from the moral implications of abusing a mortgage repayment scheme brought in at a time of national crisis, it could play out badly for the landlord. He insists that applications made could affect current and future borrowing applications.

He said “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.

Additionally, Mortgages for Business points out that most buy-to-let lenders will ask landlords to prove they are in financial hardship before granting any holiday request. While a landlord’s tenant may be in distress and unable to make rental payments – to benefit from the scheme, landlords also need to be unable to meet their mortgage repayments.

He added: “The message is simple. Do not approach lenders for payment holidays without first taking advice and thinking about the longer-term consequences. Any deferred payments will have to be made at some stage and it could create problems down the line – especially when you come to refinance or grow the portfolio.”

NRLA (with full support and action from SWLA) have called for a package of measures from the Government and mortgage providers. Including temporary scrapping of the 5 week wait for Universal Credit and ensuring lenders look sympathetically on requests from landlords for a mortgage break when their income is affected through reduced or non-payment of rent.

Article abridged from Landlord Today