Taking a buy to let mortgage payment holiday could trigger problems for landlords looking to remortgage or invest more money in their property businesses.
Consumer champion Which? claims some lenders are rejecting mortgage applications if landlords have taken advantage of the coronavirus aid package.
Landlords can ask for a mortgage repayment holiday to help tenants struggling to pay rent due to the pandemic.
Tenants must agree a repayment plan to take advantage of the break.
The holidays are open for landlords until October 31.
Although monthly payments stop until then, interest is still added to the account.
From November 1, the mortgage is recalculated over the remaining term and the unpaid interest is added to the monthly payment.
Market regulator the Financial Conduct Authority says payment holidays should not impact credit scores, but lenders can still ask if landlords have taken a payment holiday when considering an application for a new loan.
Brokers have told trade magazine Mortgage Solutions that landlords taking payment holidays have seen applications rejected.
As a result, Which? is warning landlords should only take a payment holiday as a last resort.
One broker says he has seen several lenders factor mortgage holidays into their underwriting and influence their lending decisions.
Brokers argue that some lenders take the view that asking for a payment holiday shows a landlord cannot afford the borrowing on a rental property and that this could affect future loan repayments.
Chris Sykes, mortgage consultant at Private Finance said he could see it from the perspective of both lenders and landlords.
“This is a short-term measure and I don’t expect we will see it being an issue in six months’ time as it leaves no lasting negative on a credit file.
“However, I do not think people realise the affect it can have, maybe they should be called an emergency payment break rather than a holiday.”