Mortgage Breaks

[tinkerbell23]

Does a payment holiday affect your credit rating?

Trying to plan how long I can take on maternity leave.

Just wondering if i took a payment holiday for two months at the end of my paid mat leave it may allow us to save up some more to cover a month or two longer off!

Otherwise ill be back at 6 months x

[ubasses]

Firstly you need to check with your lender to see if they allow them (not all do), also check your agreement forms to see if you have a type of mortgage that allows one.
When you restart, you will not usually be allowed to just carry on with your payments, they will expect them to be increased to catch up with the missing months, so ensure you can afford the extra amount.
Some lenders record the break as an 'arrangement to pay' which will affect your credit rating.
Sorry this in not a definitive answer but Lenders are all different and have their own rules on this type of thing.

[tinkerbell23]

Thank you for the advice!

Id rather NOT have an “arrangement to pay”

Ideally we will just save hard next few months to bank money to live off at the end!!

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[ummmm]

Obviously check with your mortgage lender but your monthly payment will almost certainly rise as Ubasses said.

[AuntLydia]

If you have a mortgage of £200,000 at an interest rate of 4.5% over 25 years, your monthly payments will be around £1110.

If you then take a three month holiday, the interest over the three months - about £2,200 - will be added to your outstanding balance. To cover this shortfall after the holiday, your payments will go up by around £18.60 per month, to £1128.60.

[Flonska]

You need to talk to your lender and ask what information they provide to a credit reference agency especially if it provides data as to the month-by-month payment record and exactly how a payment holiday will be reported. If the "payment holiday" is agreed and if it does affect your credit file record at the agency you can apply to have a "notice of correction" placed on your record. This notice allows you to explain the circumstances so that other credit lenders can see what has happened. It does not follow that you will be granted other credit but the rules are that what is in the notice must be read by those making a credit/lending decision about you.

Here is some more information which might help

https://www.moneyadviceservice.org.uk/en/articles/mortgage-payment-holidays

[AuntLydia]

If the mortgage holiday is approved by your lender Credit Agencies are not involved as long as you continue to repay your mortgage when the holiday period ends.

[tinkerbell23]

Thanks everyone!!! I think it sounds like a hassel/risky!!

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