Does a payment holiday reduce the chances of getting a new loan in the future?
According to Luminor Head of Credit Products Heiki Raadik, the first wave of grace period applications has passed and some people have already begun to cancel their payment holidays prematurely. According to Raadik, taking a payment break does not prevent you from getting a new loan in the future.
“The crisis definitely had a negative impact on many people and the demand for loan payment breaks rose on the account of people losing their jobs or facing a decrease in income,” said Raadik. “By now, the number of new grace period applications has fallen considerably. For instance, in the last month we only received 30 housing loan grace period applications in Estonia. At the beginning of the crisis we received 850 applications within a month.”
Raadik adds that there are positive signs of many people wishing to cancel their grace periods prematurely.
“It seems that the first scare is over and those who applied for a grace period as a precautionary measure are now cancelling it. On the other hand, the situation is far from over and payment breaks can be applied for until the end of September where needed,”
All banks have currently agreed on common payment holiday terms and conditions until 29 September and this means that customers can apply for a grace period of up to 12 months for their loan principal payments. “This does not entail any additional fees and all of the current terms and conditions, incl. the loan interest, will apply,” said Raadik and added that applying for a grace period does not affect the customer’s chances of getting a new loan in the future if they fulfil their obligations as required.
Currently, 6% of all Luminor home loan customers in Estonia are on a payment holiday.