The mortgage lender said that while most customers contacted them to agree to a three-month mortgage payment holiday, some members canceled their direct debit first.

Normally, canceling a direct debit set up to pay off your mortgage would have a negative effect on your credit rating.

However, Nationwide has confirmed that it is working with customers to “restore direct debit” and to ensure their credit records are not adversely affected.

A spokesperson said: “We’ve always had this process because sometimes people accidentally cancel a direct debit. However, if you cancel your direct debit instead of arranging a payment holiday and you do not speak to us, your credit report could be affected as Nationwide would continue to accept payment as usual.

The mutual added that, where possible, members should apply for a payment holiday online in order to keep the phone lines free for vulnerable customers.

It currently takes about seven days for a mortgage payment holiday to be put in place. The direct debit will automatically be suspended, so there is no need for people to cancel it. This allows payments to resume normally after the payment holiday is over.

Three-month mortgage payment holiday

Last month, the government announced that mortgage lenders would offer customers three months payment holiday in an effort to support financial security during the coronavirus pandemic.

Mortgage repayment is deferred, but the debt is not written off and interest will continue to accrue for the period.

So far, more than 1.6 million payment holidays have been agreed with customers, with one in seven mortgages subject to payment holiday, the latest data from trade body UK Finance has revealed.

He said customers shouldn’t cancel direct debits without first contacting the lender because the cancellation is not a payment holiday and will be considered a missed payment. This could show up on credit records and affect clients’ ability to remortgage in the future.

Typically, the bank will automatically suspend payments once the mortgage / payment holiday has been approved and they will be automatically reinstated once the mortgage holiday has ended.

However, for those paying by standing order, it is the customer’s responsibility to reverse the payment once a mortgage holiday has been approved and then reinstate it after the vacation has ended – although the amount will need to be adjusted accordingly.

Free credit report provider Credit Karma UK has said that requests for payment leave can take up to a week, customers should anticipate in order to avoid unauthorized missed payments.

His research suggests that more than three million Britons have already missed regular payments due to a coronavirus disruption and nearly five million expect to do so.

Akansha Nath of Credit Karma said, “Credit reporting agencies have agreed that any consumer using an ’emergency payment freeze’ for those affected by the coronavirus will not have their credit rating affected. So, for those who are in financial difficulty, this is a key lifeline. But these arrangements are rarely put in place overnight.

“You will need proof that your repayment vacation has been approved by your lender, and it may take time. Borrowers should try to engage in a dialogue with their lender as soon as they are concerned about missing a payment, as a default will impact your score.

Is Mortgage Payment Holiday Right For You?

Aman Johal, lawyer and director of consumer law firm Your Lawyers, said lenders need to be clear in advising clients on what to do and how mortgage leave can affect them in the long run. , and whether clients need to cancel direct debits and standing orders or leave them in place.

He said: “The money may not be withdrawn during this period or the money may be credited. Customers may also have to wait until the next payment period before the holiday takes effect, and a notice must be issued as to when to cancel a direct debit or standing order if that is the action required.

“Payment holidays may not be suitable for everyone. Mortgage clients should check with their lender for information and assistance, as payment holidays are only recommended when essential. The money still needs to be repaid at a later stage, and mortgage companies may continue to charge interest while on vacation, which can increase the overall cost of the loan.

Below are the details of the major lenders regarding their mortgage payment holidays:

Barclays

The easiest way to request a mortgage payment holiday is online at Barclays. Once accepted (customers receive an SMS receipt and then a confirmation is issued within 48 hours), the direct debit instructions are suspended and reactivated at the end of the payment holiday.

When customers pay by standing order, they will need to notify their bank, as they would when rates are adjusted and a change is required.

HSBC

Customers can request a payment holiday online with HSBC. the implementation of a payment holiday can take up to seven days. However, when the customer’s payment is due earlier than that, he should contact HSBC so that they can aim to set up the payment holiday before the payment due date.

HSBC will suspend the customer’s direct debit and they will resume automatically after the holiday. A letter will be sent in advance to clients confirming when payments will resume and their options.

HSBC said it has seen cases where customers have canceled their direct debit and they will need to reinstate it. He will contact customers to make arrangements for this to be restored.

Lloyds

Those affected by the coronavirus and in need of mortgage payment leave can apply online or by contacting Lloyds through its customer support pages.

Customers will then receive an SMS within three to five days to let them know if their request has been accepted.

When a payment holiday is taken, the monthly payment will be calculated when it ends on the new balance and for repayment mortgages, the payments that have not been made will be spread over the remaining term of the mortgage which means the payment will increase.

If a client’s next mortgage payment is due within 10 business days, their payment holiday may not begin until the following month. They will receive a confirmation by SMS of the start date of their payment leave.

If customers pay by direct debit, they do not need to take any further action as Lloyds will automatically suspend and reinstate direct debit at the end of the payment holiday.

If you are paying your mortgage through another method, once Lloyds has confirmed that payment holiday has been approved, customers must cancel all existing payment terms, such as a standing order.

Once the payment holiday is over, customers will need to reset the payment method. Lloyds will confirm any new payment amounts in writing before money is withdrawn after the payment holiday has ended.

RBS Group (including NatWest and Ulster Bank)

Customers must apply online and once the application is submitted, customers will receive an email within seven days to confirm when the payment holiday will take effect. It will also include an estimate of the increase in the mortgage payment after the vacation period ends.

However, if a payment is due within the next 14 days, they may not be able to change that payment. This will be confirmed after the bank has processed the request.

Payments will resume automatically so customers don’t have to do anything.

Santander

Customers can request a mortgage payment holiday using its online form. But for customers who don’t have internet access or who have less than ten days before their next mortgage payment is due, they should call Santander on 0800 023 4603.

Once the payment holiday is in place, a customer’s direct debit will be automatically suspended. They should not cancel their direct debit as this could prevent payments from restarting at the end of the payment holiday.

Once the payment holiday is over, payments will automatically resume so customers don’t have to do anything.

Santander adds that when customers may have canceled their direct debit, they should get in touch to avoid any negative effect on their credit report.

BST

Clients can apply online and TSB recommends that clients give at least 10 working days notice in order to obtain approval and set up the payment holiday.

TSB will write to clients two weeks before the end of the payment holiday to confirm the new amount.