One of our areas of speciality is helping those who are self employed arrange their mortgages. Here we take a look at the process involved.
Can I get a Mortgage during Lockdown?
As we are well into the lockdown, lenders practices are evolving all the time. For mortgages we need to break it down into three sections:
1. Can I remortgage during the lockdown?
In short yes, however there are a few pitfalls for you to watch out for. Firstly if you want to borrow more than 75% of the property value you may struggle. The reason for this is that lenders may want to carry out a valuation of your property, if you are borrowing under 75% most lenders have an automated or desktop valuation system in place that means a person does not physically need to visit the property. For those of you wanting to borrow over 75% of your property value then the most sensible course of action would be to contact your existing lender to see if they have any product transfer deals that would be appropriate for you, or get a broker to do it for you.
2. Can I move house in the lockdown?
This is a bit more tricky, I have arranged mortgages during the lockdown for people who are moving house as they have been for mortgages of less than 75% of the property value (see above). I have also had clients who have moved during the lockdown, this is a bit of a grey area as far as the “rules” go. All of my clients were moving into empty properties so a short chain, presumably all social distancing measures were adhered to.
The main issue with purchasing a property is the difficulty getting a valuation, if a surveyor cannot attend the property and the lender wants a valuation then you are snookered.
3. Can I get a mortgage if I’m furloughed?
In theory this is a yes. However as I mentioned earlier, lenders practices are constantly evolving and the longer the crisis continues then the less generous they are going to be. At the moment many high street lenders are saying they will lend to you based upon your furlough amount. Ideally your application will be accompanied by a letter from your employer stating that you will be welcomed back at work after the crisis is over. The chances are that if you were thinking of moving house you may well have put that on hold for the time being anyway. For a remortgage whilst furloughed, then again as long as you are looking at 75% or less and the mortgage is affordable on the furlough salary then you are good to go.
I hope these tips help, for more you can find me on Facebook, Linkedin, Twitter and Instagram. Happy to have a no obligation chat, all mortgages applied for during the lockdown will have no broker fees applied.
How will the Interest Rate cut effect my mortgage?
If I was asked a week ago “Will Coronavirus effect my mortgage?” I would have dismissed it as ridiculous. However this morning the Bank of England have announced a slash of the interest rates by 0.5% to 0.25%.
These are unusual times as one would not expect the Bank of England to be getting involved in a health crisis. The Chancellor has a lot on his plate when he announces his first budget today. It is widely expected he will announce spending plans as part of Boris Johnson’s election pledges but he also has the backdrop of an economic crisis brought on by the Coronavirus.
Firstly mortgage rates, I expect this cut to be a short term measure and would be surprised if the rate was still 0.25% in the summer. However if the rate remains at this level beyond the summer then there is a reasonable chance we could see headline mortgage rates falling a little. Do bear in mind they are very low already, with five year fixed rates being available from a staggering 1.49% (with the right amount of equity/deposit).
If you have a tracker mortgage then you can expect your rate to drop from 1st April, do check your T’s and C’s just in case your particular tracker deal has a “floor” beneath which your rate cannot fall.
In the budget later it is expected there will be big spending plans but also there is pressure to reduce the burden on small businesses. I think there might be a reduction in corporation tax and possibly a short term reduction in VAT. The worry for the chancellor must be “how can i cut tax and spend more? Where is the money going to come from ?” I guess he could put an emergency tax on toilet roll and hand gel!
I think for the majority of us the rate cut won’t have a massive effect. If the Coronavirus crisis is short lived then we can all get back to normal and live happily ever after. However if things get worse, as some quarters are predicting, then a reduction in the major household outgoings will be welcomed by the general public and will hopefully mean the UK doesn’t slip into recession.
These are unprecedented times and nobody really knows what will happen. The message I’d like to leave you with is: Wash you hands.
After 3 years of Brexit uncertainty, is the housing market bouncing back?
5 Questions to ask when Remortgaging
Remortgaging can fulfil a variety of needs. From releasing equity to pay for the things we love, to reducing the time it takes to pay our debt in full, many of us will consider a remortgage at some point in our home owning lives.
Ultra-low interest rates have driven a surge in remortgage applications, with 120 per cent more applications last winter than there were in 2014. The reports of massive savings and reduced mortgage terms is enough to send us all running to the lenders for quotes, but it’s important to think things through when it comes to a mortgage.
A mortgage is unlike any other form of lending; it’s the one biggest purchase most of us make in our lifetime, and is something we’ve got to live with for many years of our lives. Added to this is the ongoing concern that if we get it wrong, we could end up homeless. With all this in mind, it’s clear that a remortgage should be undertaken with the utmost care and consideration.
Here are the questions you should be asking yourself, and your lender, before entering into any kind or remortgage deal:
Is this the right time to remortgage?
Depending on your situation, it could be a great time to remortgage, or a really bad one. If you’re in a good value mortgage deal already or have big penalties to pay if you leave, chances are it’s not the right time to switch. However, if you’re at the end of your current deal, are on a fixed rate which is no longer good value, or want to release some of the equity from the house, it could be a good time to consider a remortgage.
How much is this going to cost?
Unfortunately, nothing in life comes cheap, and the same goes for your remortgage deal. Aside from any exit fees you might have with your current lender (be sure to check these out thoroughly before going any further), there are several other costs associated with remortgaging. For example, you’ll need to pay an arrangement fee to join a new lender, will need survey and legal fees and there may be other administrative costs to cover depending on how your lender is set up.
Will I be able to get a good / better deal?
New mortgage rules came in during 2014 that could mean you’ll struggle to obtain a good value mortgage in the current economic climate. Lenders must closely analyse your income and expenditure, and will undertake much more rigorous tests to ensure you can afford the new mortgage. If your circumstances have changed since you last got a mortgage, don’t presume you’ll get the same or similar deal as you did last time.
What am I trying to achieve?
There are numerous reasons people consider a remortgage, so be certain of your financial goals so you can effectively ensure they are being met. For example:
You want to pay off other debts: If you want to remortgage to release equity and pay off credit deals elsewhere, make sure your mortgage is the right vehicle for doing this. Once you’ve taken into account the fees and charges, a personal loan might be better.
Your deal is ending or poor value: This is a great reason to remortgage, but you need to be confident you’re getting a better deal from your lender. Do your sums, and don’t sign until you’re confident it’s worth it.
Your home has appreciated: If your home has gone up in value significantly, you could be in a new loan-to-value band, meaning you could be eligible for much lower rates of interest.
Other reasons include changing from an interest-only to a repayment mortgage, or to reduce the overall term on the agreement now you’re able to pay more. Whatever reason you’re remortgaging for, have your overarching financial goal in mind and assess any offer to ensure it’s ticking your box.
Is my credit file healthy?
It almost goes without saying that a good credit record is fairly essential to switching to a new mortgage. The more black marks or outstanding debts on your file, the fewer deals will be open to your application. Get a copy of your report before you start applying, and check everything on there is fair and accurate to avoid nasty surprises later on.
More on credit reports and how to improve your score here.
As a homeowner, it is your right and privilege to seek out a better deal for your mortgage. Many borrowers report saving thousands of pounds over the lifetime of their mortgage as a result of switching away from their original deal, so it could pay dividends to compare the market from time to time.
However, as with any loan, do make sure you can afford the repayments and that the overall deal makes good financial sense before you sign on the dotted line.
For more advice on remortgaging and help finding a great deal, contact me on 01252 759233 or email info@thesurreymortgagebroker.co.uk