‘Switching to interest-only is far more detrimental than a payment holiday’ – Star Letter 24/04/2020

‘Switching to interest-only is far more detrimental than a payment holiday’ – Star Letter 24/04/2020

 

This week a debate was sparked under the article: Brokers warn mortgage holidays should be ‘last resort’ for borrowers.  

One comment was made by Stuart Phillips, who said: “Why would a lender look negatively at a payment holiday? It was taken with the consent of a lender and the payments added to the balance. 

Suggesting switching to interest-only is bonkers, that’s a far more detrimental option in the long term. 

He added: “People should use the tools they have available to get through this as best they can. Payment holidays were a sensible way to take pressure off a household in the very short term.  

Savvy borrowers can put the savings aside, and repay the holiday if it’s not needed, giving them a little extra liquidity in uncertain times with the option to avoid an overall increase in interest paid. 

 

Get a second opinion

Another article to provoke a range of responses was: ‘Challenging a valuation is akin to reinventing the wheel’ – poll results.

Derek said: “Lenders need to take more control of the valuers they employ and not just roll over and agree with whatever they say. I have recently had a valuation on a buy-to-let multi block unit.  

The valuer would not put a value on the property because in his opinion, an external metal access stairway, did not meet building regulations. Even when we had confirmation from the council building regulations department that it would meet standards, the lender refused to proceed stating that they have to accept their valuer’s opinion.

The coronavirus situation could cause numerous valuation issues if lenders do not get a grip of their valuers,” he added. 

Corby Macdonald chimed in with his own experience. He said: “I had one challenge, where the valuer had used a comparable from a property that was 18 months old, we did the same and told we were not allowed.  

“The key problem is the lenders just roll over to the surveyor and their processes to challenge the valuation are so loaded against the broker it becomes a futile waste of time.  

He added: “I believe that once a valuation is challenged it should be panelled out by the lender to a second company with no knowledge of the previous valuation to review everything and come up with the valuation, which is binding on all sides.  

“This will lead to a genuine second opinion being obtained. We are mortgage brokers not surveyors, we do our best, because a down valuation costs us business.”