Lenders' IT systems can recognise mortgage payment holidays as mortgage arrears,leaving customers with poor credit ratings, warns a Wolverhampton IFA.
Kingstons IFA Andrew Clothier says the issue came to light when Woolwich refused his client a mortgage despite the client having never missed a payment with her mortgage with Halifax.
Woolwich refused her application because in the previous 12 months only 11 payments had been made on her mortgage. The client had taken a mortgage payment holiday, as she was entitled to do under the flexible features of her Halifax mortgage.
Halifax was unable to give a reason why taking a payment holiday led to the client's credit rating being hit.
Credit reference agency Equifax suggests that borrowers should contact the credit-rating agencies and ask for a “notice of correction”. This is placed against the missed payment entry on the credit file free of charge.
Clothier says: “This is all very well as long as your credit file is analysed by a human rather than a machine. If your mortgage application is assessed by a computer, it may not react to the notice.”
Scottish Widows' cover and protection marketing director Nick Kirwan is determined to restore the public's confidence and trust in financial services