Landlords who have taken a payment holiday because tenants are unable to pay rent are finding they are being rejected for mortgages to buy new properties. Borrowers are being urged to think carefully about taking a break in repayments, especially if they are planning on adding to their portfolio in the near future. As with residential mortgages, landlords have been able to access a break in mortgage repayments for 3 months since March. Recent guidance from the Financial Conduct Authority (FCA) means extensions of a further 3 months are available, with applications for a pause open until the end of October. Payments breaks do not negatively affect credit files and this appears to be giving the impression that the ability to borrow is not impacted. The regulator warned that “credit files aren’t the only source of information which lenders can use to assess creditworthiness”. Lenders are now turning down purchase applications if repayments are not being made on one of the properties in the portfolio. Landlords need to think carefully when requesting a holiday, especially if other applications are imminent or in progress. “It’s easy to understand the lenders’ mentality on this. A payment holiday is effectively an admission of not being able to cover the mortgage payment, and so should be used only as a last resort.” For help or advice, please call The Mortgage Bureau on 01223 656412.