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VICTORIA BISCHOFF: A mortgage break could be a very costly ‘holiday’

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victoria bischoff a mortgage break could be a very costly holiday

As the pandemic tore through the nation’s finances in the spring, the promise of a mortgage holiday seemed like a vital financial lifeline for millions of hard-pressed families.

But how many of those who jumped at the chance will come to regret it?

When Chancellor Rishi Sunak first pledged mortgage support in March, ministers were at pains to reassure borrowers that their credit scores would not be affected if they took a payment break.

Even a three-month mortgage holiday can have lasting and costly consequences on your personal finances

Even a three-month mortgage holiday can have lasting and costly consequences on your personal finances

Even a three-month mortgage holiday can have lasting and costly consequences on your personal finances

Even the phrase ‘mortgage holiday’ sounded harmless. Yet it’s now becoming clear that, far from a carefree break, even a three-month hiatus can have lasting and costly consequences.

Most homeowners assumed that if a payment break wasn’t recorded on their credit file, it would have no impact on their ability to borrow in the future. But, disgracefully, this isn’t the full story.

Lenders have other ways of finding out about it. They can demand that borrowers declare it on applications, or see it via bank statements — and many banks and building societies won’t like the extra risk they associate with it.

Some firms say it is not the mortgage holiday itself that acts as a red flag, but the reason behind it, such as a pay cut.

And while it is right that firms don’t lend to customers who cannot afford to repay debt, more should have been done to warn the nearly two million borrowers who have taken payment holidays since March of potential repercussions.

Struggling to cope with a flood of requests, banks initially took borrowers at their word when they said they needed to halt repayments due to the pandemic.

But it’s clear now that not everyone who took a break really needed one. Some took one as a precaution in case they were later furloughed or lost their job. Others saw the scheme as a chance to save a bit of cash so they could finally do up their house or garden.

Banks have become wise to this and are now clamping down. But it’s a balancing act. Lenders may be right to take a tougher stance, but as we reveal on Page 44, it means that some who really are in need are also being turned away.

Anyone contemplating a mortgage break must remember they are not being given a holiday from interest charges.

These continue to accrue over the break and are added to your debt, which can mean you will pay thousands of pounds extra over the loan’s lifetime. It’s crucial you resume your repayments as soon as possible and, if you can, clear the interest that has built up.

Mortgage holidays are proving a crucial aid for many — but they should be a last resort. Above all, desperate families who followed the Chancellor’s guidance must not be penalised in future by banks who never take a holiday from trying to screw every last penny out of their customers.

Savvy spenders

My favourite local Italian restaurant closed its doors last week. Like so many new small businesses, it just didn’t have the cash reserves to survive Covid-19.

It is a bitter blow for our local high street — one that is being echoed up and down the country as shops, pubs and restaurants face going to the wall. Money Mail will always promote thrift — but if you can, now is the time to loosen the purse strings a little.

As we have previously reported, many people are better off than ever thanks to lockdown. And while you shouldn’t abandon your new savings habit, spending a little extra could help save businesses.

The launch of Dishy Rishi’s Eat Out To Help Out scheme this week means you don’t even have to spend that much.

Book a table at a participating restaurant Monday to Wednesday and you’ll get 50 per cent off your meal, up to £10 per person. You don’t need a code or coupon — the money is automatically deducted from your bill.

I understand that many people are nervous about venturing out, or put off by the idea of waiters in masks, but if we don’t support our High Streets now, they may not survive to celebrate the end of social distancing with us when that time finally comes.

v.bischoff@dailymail.co.uk

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Tech Nation beefs up board as it strives to help economy

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tech nation beefs up board as it strives to help economy
Boost: Tech Nation helps nurture British technology companies

Boost: Tech Nation helps nurture British technology companies

Tech Nation – the Government-backed technology industry body – has beefed up its board as it strives to help the economy recover from the coronavirus crisis. 

Eric Collins, a black entrepreneur who helped Barack Obama’s start-up diversity drive, is among the four new directors. 

Collins, who served on Obama’s Small Business Administration’s Council on Underserved Communities, runs London-based Impact X, an investment firm that backs companies run by or for minority groups and women. 

The other directors are Hussein Kanji, a partner at venture capital firm Hoxton Ventures, Annette Wilson, the European chair of venture capital firm Antler, and Trecilla Lobo of BenevolentAI, the biotech firm with artificial intelligence technology. 

Tech Nation said the merit-based appointments took into account the ‘benefits of diversity’. 

Tech Nation helps nurture British technology companies. It is aiming to help the tech sector boost the economy by an extra $1billion by March 2022.

This post first appeared on dailymail.co.uk

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Pizza duo snap up bargain sites for expansion

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pizza duo snap up bargain sites for

Two former Pizza Express chiefs are snapping up cut-price high street sites as they spot the biggest expansion opportunity for 25 years. 

Hugh Osmond, who runs Coppa Club owner Various Eateries, and David Page, who owns Franco Manca and The Real Greek restaurants, have been eyeing venues vacated by struggling businesses. 

Expansion plans: Hugh Osmond and David Page have been eyeing venues vacated by struggling businesses

Expansion plans: Hugh Osmond and David Page have been eyeing venues vacated by struggling businesses

Entrepreneur Osmond, who built up Pizza Express in the 1990s recession alongside Page and Luke Johnson said he spent last week fielding calls from landlords offering sites facing closure due to Covid restrictions. 

He listed Various Eateries on the stock exchange on Friday after raising £25million and will open a new 5,000 sq ft Coppa Club in Cobham, Surrey this autumn. 

He said there are hundreds of other available sites in prime towns and and plans to eventually open up to 20 restaurants a year. 

Page is looking at buying the leases for former Byron Burger, Carluccio’s and Le Pain Quotidien outlets in London, Bath and Cambridge. 

He said: ‘The rents are all falling by the week.’

This post first appeared on dailymail.co.uk

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Payment holiday CAN affect home loan, says Minister

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payment holiday can affect home loan says minister

A Treasury Minister has given banks the all-clear to turn down borrowers who took loan repayment ‘holidays’ during lockdown. 

In a letter seen by the MoS, John Glen has said a payment holiday may impact a lender’s ‘willingness to provide credit’ – even though Ministers previously promised that borrowers would not be affected. 

More than three million people – many of whom are being paid by the Government’s furlough scheme – used payment holidays having been assured it would not affect their creditworthiness. Business secretary Alok Sharma said in March that ‘it shouldn’t affect your credit score’. 

In the red: More than three million people used payment holidays having been assured it would not affect their creditworthiness

In the red: More than three million people used payment holidays having been assured it would not affect their creditworthiness

In the red: More than three million people used payment holidays having been assured it would not affect their creditworthiness

But the MoS has revealed that customers are now being turned down for mortgages because they took a payment break. The City watchdog has allowed banks to inspect account data to work out if someone took a holiday on repayments. 

In a letter to Labour MP Siobhain McDonagh, Glen said: ‘When considering whether or not to accept new loan or credit applications, lenders will look at a range of factors beyond a borrower’s credit file. This could include asking the customer whether they have taken out a payment holiday as well as assessing income, expenditure and future ability to make repayments.’ McDonagh, who sits on the Treasury Select Committee, said: ‘Yet again the Government is backing up the banks in bad behaviour. 

‘People were clearly misled by the Government and the banks that if they requested a payment holiday it would have no impact on their future ability to borrow. 

‘They’ve used a sleight of words – they’ve said it won’t affect your credit scoring, but it can still be taken into account.’ 

Film editor Dave Wilson, 44, said he was unable to move his Santander mortgage to a new property because he took a payment holiday. He is trying to move to a new house to make room for his third child with wife Jane. 

He said: ‘When the Government said we could take a penalty-free holiday, I thought it wouldn’t be a bad thing to do. Our biggest bugbear is that we were not told at the time that it would have an effect on our ability to remortgage.’ 

A Santander spokesman said it is reviewing Mr Wilson’s case. It said a payment holiday should not impact a customer’s request to port a mortgage to a new property.

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This post first appeared on dailymail.co.uk

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