Mortgage repayment holidays result in rejections

Mortgage repayment holidays have led to one in 10 mortgage applicants being rejected, despite initial reassurances that taking out a payment holiday wouldn’t impact people’s credit files, NerdWallet research has found.

People could apply for mortgage repayment holidays until March 2021, which enabled those adversely affected by the pandemic to press pause on their monthly loan payments.

more strenuous for prospective homebuyers

However, the poll suggests some lenders aren’t looking at those forced to use a payment holiday very kindly.

John Ellmore, director of operations at NerdWallet, said: “The UK’s property market has bounced back strongly from the initial lockdown period, with house prices and transactional activity rising sharply.

“However, the pandemic and subsequent recession might have made mortgage applications more strenuous for prospective homebuyers as lenders tighten their criteria.

“This can be incredibly frustrating for mortgage applicants – especially when they are rejected for reasons that are largely beyond their control or simply unknown to them.

“Indeed, applicants who have taken advantage of loan repayment holidays as a consequence of the financial pressures caused by the pandemic may well find themselves unfairly targeted, given use of such schemes was not meant to impact on their ability to access credit in the future.

“Our research shows that the mortgage market can be difficult to navigate, underlining the importance of thorough research and preparation.

“Taking time to speak to multiple mortgage lenders and comparing different options online, for example, could save people time and effort when it comes to the actual application process, ensuring they do not pursue unrealistic or inappropriate options.”

Some 9% of applicants had their application rejected without knowing the reason why.

Almost half (48%) of mortgage customers found the application process stressful, with 50% calling upon the help of a mortgage broker.