Getting a mortgage is a big step towards buying a home, and is definitely cause for celebration. Your mortgage deal might have been competitive when you first got it. However, by regularly reviewing your mortgage and remortgaging when an appropriate deal is available, you could save a lot of money, amounting to thousands of pounds.
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.
In my career as a mortgage broker I have more often than not recommended taking a two year deal out to clients, of course individual circumstances are important to consider but in the main two year deals have been incredibly popular.
If you are someone who fixed their deal two years ago you will have been one of the lucky homeowners taking a deal when the lowest ever average two year fixed rates were available (this was September 2017 according to Moneyfacts, the average two year fixed was 2.17%).
This will mean that in the next month or two if you haven’t already done something about it your mortgage payment is going to jump onto the lender’s standard variable rate. I remember organising some deals with Accord Mortgages a couple of years ago that were at a fantastic fixed rate of 0.99%. I told my clients that they were unlikely to get this sort of deal again. Accord have a standard variable rate of 4.99% so the interest charged to you will be five times higher if you do nothing.
Luckily it is relatively easy to switch mortgage deal these days and more and more lenders are offering competitive deals to their existing customers. Historically this was not the case but lenders are realising the best customers they can get are the ones they already have.
Speak to your broker and have a look at what your existing lender can do. Often I find that the existing lender doesn’t have necessarily the lowest rate available but to save on the hassle factor it can be easier to stick with them rather than change lender and have to involve third party solicitors that can frustrate the process.
Rates are still very competitive but there aren’t any deals at less that 1% fixed today, however there are plenty of deals at around the 1.5% mark for two years and the five year fixed options are being exercised by many people with competition here pushing the five year rates (as long as you have sufficient equity) well below 2%.
Hopefully your broker has been in touch to remind you that your deal is coming to an end, also lenders will usually write to you to let you know so that you have enough time to do something about it. If not then hopefully this article will prompt you into action. Needless to say if you happen to end up on the standard variable rate then when the mortgage payment goes out of your account you’ll probably sit up and notice.
