Financial advisory firm LightBlue UK has warned mortgage holiday recipients that they “may be heading for trouble”.
The firm said consumers must consider three principal points when seeking a new mortgage; mortgage holiday’s causing lenders concern, inconsistences with valuations and proof of salary burdens.
According to the financial advisory firm, mortgage holidays may cause lenders concern as the pause could lead to adverse credit ratings and new mortgage or remortgage applications being flagged as an issue.
While lenders claim they have no adverse policy against mortgage holidays, unofficially there is expectation within the industry that it will become a problem for many, the firm outlined.
Furthermore inconsistences with valuations, the firm highlighted an example where Zoopla listed a client’s £500,000 property at £525,000 and the application was submitted at £525,000.
However, NatWest’s surveyor valued at £450,000 meaning the rate on offer was much higher for the client, yet a month later Nationwide’s surveyor valued the same property at £500,000.
This creates issues for consumers when deciding on deposits.
Additionally, the firm highlighted that lenders are increasingly requiring 12 months of statements as opposed to three, in order to show consistency with the reported figures shown on the latest tax year overviews and tax computations.
Lenders are becoming more apprehensive about using historic overtime and bonuses as a guide to income due to the potential uncertainty ahead, it explained.
Zane Groves, mortgage specialist at LightBlue UK, said: “The market is slowly recovering but a lot of that is bottleneck business from before COVID.
“Stamp duty change is making a big difference and increasing the volumes, but the majority of underwriters are still working from home and this also makes the application process slower.
“It is still challenging to get through to some lenders on the phone – one lender recently said not to call them for an update on cases submitted in the past 19 working days – and a generous LTV offer may mean that lender gives poor service levels.”